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Our reporters and editors focus on the points consumers care about most how to save for retirement, understanding the types of accounts, how to choose investments and more so you can feel confident when planning for your future.
How Will My Pers Benefit Be Affected When I Draw Social Security
Your PERS benefit is not affected by Social Security. However, your Social Security benefit may be affected because you receive a PERS pension. The Government Pension Offset and the Windfall Elimination Provision are the two Federal Government regulations that may reduce your Social Security benefit. We suggest you contact the Social Security Administration using their toll-free number 800-772-1213 or visit their website at www.ssa.gov to find out more information.
Children Can Also Collect Social Security Benefits
Minor children of Social Security beneficiaries can be eligible for benefits. Children up to age 18 and disabled children older than 18 may be able to receive up to half of a parents Social Security benefit. The disability must have occurred before the age of 22. The adult child can continue collecting the benefit even after the parent has died, as long as the disability prevents them from working.
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How Long Will You Live In Retirement
Based on current estimates, a 65 year old man can expect to live approximately 18 years in retirement, and a 65 year old woman can expect to live about 20 years, but many people live longer. Planning to live well into your 90s can help you avoid outliving your income.
The worksheet takes into account some factors that impact your retirement savings. First, investing because it involves risk. Second, inflation because todays dollars will usually buy less each year as the cost of living rises. Your target savings rate includes any contributions your employer makes to a retirement savings plan for you, such as an employer matching contribution. If, for example, you are in a 401 plan in which you contribute 4 percent of your salary and your employer also contributes 4 percent, your saving rate would be 8 percent of your salary.
If you are not currently saving this amount, dont be discouraged. The important thing is to start saving even a small amount and increase that amount when you can. Come back and update this worksheet from time to time to reflect changes and track your progress.
Here are a few tips on how to save smart for retirement:
To track other resources you may have in retirement, start by getting your Social Security statement and an estimate of your retirement benefits on the Social Security Administrations website, www.socialsecurity.gov/mystatement.
Get started today for a secure financial future!
Taking Social Security: How To Benefit By Waiting
For those who are able to do so, it may make sense to wait even longer, because youll receive a larger monthly benefit even more than your full benefit. Every month past your full retirement that you delay, Social Security will increase your check by about 0.7 percent per month.
If your full retirement age is 66, then heres how much your check would increase:
| Retirement age | New benefit | A $1,000 check becomes |
|---|---|---|
| $1,320 |
So if your full retirement age is 66, then if you can wait two more years and claim benefits at age 68, youll increase your monthly check by 16 percent. In this case, if your full benefit were $1,000 a month, your new benefit would become $1,160 per month. And youll still receive cost of living adjustments on top of this amount, typically raising your payout a little each year.
Workers have other ways to grow their Social Security benefits, too, but its important to start early.
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Do I Pay Federal Tax On My Social Security
Some people who get Social Security must pay federal income taxes on their benefits. However, no one pays taxes on more than 85% percent of their Social Security benefits. You must pay taxes on your benefits if you file a federal tax return as an individual and your combined income exceeds $25,000.
What If I Take Benefits Early
If you choose to take your own Social Security benefit before your full retirement age, be aware that the benefit is permanently reduced by five-ninths of 1% for each month. If you start more than 36 months before your full retirement age, the worker benefit is further reduced by five-twelfths of 1% per month for the rest of retirement.
For example, let’s assume you stop working at age 62. If your full retirement age is 67 and you elect to start benefits at age 62, the reduced benefit calculation is based on 60 months. So, the reduction for the first 36 months is 20% and then another 10% for the remaining 24 months. Overall, your benefits would be permanently reduced by 30%.
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What If I Change My Mind
If you receive Social Security benefits at a reduced rate but then change your mind, you have the option of withdrawing your application within the first 12 months of receiving benefits and paying back to the government what you’ve already received . Then, you could restart benefits at a later date to take advantage of a higher payout. Be aware that you’re limited to one withdrawal per lifetime.
For example, let’s say you elected to receive early benefits at age 62 but then decided to go back to work at age 63. You could withdraw your Social Security application, pay back the years’ worth of benefits you received, go back to work, and then wait until your full retirement age to restart your benefit checks at a higher level.
Once you reach full retirement age, another option is to voluntarily stop benefits at any point before age 70 to receive delayed retirement credits . Benefits will automatically restart at age 70 at a higher amountâunless you choose to start taking benefits before then. Note that when you withdraw your application or stop your benefits after full retirement age, you must specify if your Medicare coverageâif you have itâshould be included in the withdrawal.
Early Benefits Can Still Pay Off
However, taking early benefits can still pay off despite the reduced monthly check. But youll want to be sure you budget for a reduced benefit.
No one can predict how long youll live, but if youre facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate, Neiser says.
Married women are also good candidates for claiming early benefits because they are likely to outlive their husbands. Those widows then become eligible to receive the greater of either their benefit or their late husbands benefit.
However, this scenario works only if the husband does not claim his benefits early. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives. So, youll want to calculate how filing early will affect your spousal benefit here.
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How Do I Change My Mailing Address
Retirees may change their mailing address in writing or changed by the retiree on the PERS website through their secure account. If you choose to submit a written request, you may do so by printing and completing the Change of Address for Benefit Recipients form , or submit a written statement that includes your signature. Forms received by the 14th of the month take effect the same month.
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How Much Can I Earn If I Work After My Full Retirement Age
If you continue to work after reaching full retirement age, you may work and earn as much as you’d like. You will not be subject to the retirement earnings test, and your Social Security benefits will not be affected.
If you work prior to FRA, you may forfeit part of your benefits if you earn above annual thresholds. However, your benefit amount will be recalculated at full retirement age to account for most of those forfeited funds.
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Early Retirement And Social Security Payments
If youre wondering how much youll get from Social Security, you can check out our Social Security calculator. It estimates how much youll earn depending on your annual income, the year you were born and when you choose to start receiving benefits.
The calculations for Social Security benefits come from your highest 35 years of earnings. Thats how the Social Security Administration comes up with your average monthly indexed earnings . If you retire too early , youll receive less Social Security. Thats the downside to an early retirement.
The table below comes from the Social Security benefits retirement planner and calculates the monthly increase rate by birth year:
| Delayed Retirement Increase | |
| 8% | 2/3 of 1% |
This means that the maximum number of retirement months is 60 for those retiring at age 62 when the full retirement age is 67. So your benefits could be reduced by up to 30%. Social Security calculates this maximum by multiplying 36 months by 5/9 of 1% and then adds total of 24 months multiplied by 5/12 of 1%.
Fact #: Social Security Is More Than Just A Retirement Program It Also Provides Important Life Insurance And Disability Insurance Protection
Over 65 million people, or more than 1 in every 6 U.S. residents, collected Social Security benefits in January 2022. While older adults make up about 4 in 5 beneficiaries, another one-fifth of beneficiaries received Social Security Disability Insurance or were young survivors of deceased workers.
In addition to Social Securitys retirement benefits, workers earn life insurance and SSDI protection by making Social Security payroll tax contributions:
- About 96 percent of people aged 20-49 who worked in jobs covered by Social Security in 2020 have earned life insurance protection through Social Security.
- For a young worker with average earnings, a spouse, and two children, thats equivalent to a life insurance policy with a face value of nearly $800,000 in 2020, according to Social Securitys actuaries.
- About 89 percent of people aged 21-64 who worked in covered employment in 2020 are insured through Social Security in case of severe disability.
The risk of disability or premature death is greater than many people realize. Some 7 percent of recent entrants to the labor force will die before reaching the full retirement age, and many more will become disabled.
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Can I Qualify For Ssi While Collecting Social Security Retirement Benefits
While you cannot collect Social Security retirement and SSDI at the same time to increase your benefits beyond the full retirement amount, there is a program that may allow you to collect additional income.
SSI, which stands for Supplemental Security Income, is a Social Security program that helps seniors and those with a disability who have an extremely low income or limited assets. To qualify for SSI, you need to meet strict income qualifications and have only a minimum amount of resources. Resources, as the SSA defines the term, can be anything that can be turned into cash, such as:
- Bank accounts, stocks, or U.S. savings bonds
How Does Full Retirement Age Affect Your Social Security Benefits
If you claim your benefits at full retirement age, you will receive your standard Social Security benefit amount. If you claim prior to FRA, you will be subject to early filing penalties that reduce your benefit by the following amounts:
- 5/9 of 1% for each of the first 36 months before FRA
- 5/12 of 1% for each subsequent month before FRA
This amounts to a 6.7% annual reduction for each of the first three years and an additional 5% reduction for each following year before FRA. If you claim benefits at 62 with an FRA of 67, you will face a full 30% reduction in benefits.
By contrast, if you claim benefits after FRA, you receive delayed retirement credits valued at 2/3 of 1% per month. This results in an 8% annual increase to your monthly benefit. Delayed retirement credits can be earned until age 70, after which time there is no financial benefit to delaying your claim. Delayed retirement credits cannot be earned if you are claiming either spousal or survivor benefits.
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The Downside Of Claiming Early: Reduced Benefits
Consider the following hypothetical example. Colleen is 62 as of 2022. If Colleen waits until age 67 to collect, she will receive approximately $2,000 a month. However, if she begins taking benefits at age 62, she’ll receive only $1,400 a month. This “early retirement” penalty is permanent and results in her receiving 30% less year after year.
However, if Colleen waits until age 70, her monthly benefits will increase another 24% over what she would receive at her FRA, to a total of $2,480 per month.1 If she were to live to age 89, her lifetime benefits would be about $112,000 more, or at least 24% greater, because she waited until age 70 to collect Social Security benefits.2
Drawbacks To Applying For Ssdi And Retirement
This can backfire on some people, however. If you apply for early retirement but do not receive approval for your SSDI claim, you may be stuck drawing a smaller amount of retirement for the rest of your life. If this happened to you, we may be able to help you in appealing the SSDI denial. You have only 60 days to file this appeal after receiving a notice about the SSAs decision, however, so contact us as soon as possible after you receive a denial.
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Can I Collect On My Husband Social Security At Age 62
The Most Important Takeaways The maximum spousal benefit is equal to half of the entire benefit received by the other spouse. If youre married, formerly married, divorced, or widowed, you could be eligible. You may start receiving spousal benefits as early as age 62, but in most situations, your payments would be permanently reduced if you start too soon.
An Example Of Taxed Benefits
Lets say you receive the maximum Social Security benefit for a worker retiring at FRA in 2021: $3,148 per month. Your spouse receives half as much, or $1,574 a month. Together, you receive $4,722 a month, or $56,664 per year. Half of that, or $28,332, counts toward your combined income for determining whether you have to pay tax on part of your Social Security benefits. Lets further assume that you dont have any nontaxable interest, wages, or other income except for your traditional individual retirement accounts required minimum distribution of $10,000 for the year.
Your combined income would be $38,332half of your Social Security income, plus your IRA distributionwhich would make up to 50% of your Social Security benefits taxable because youve exceeded the $32,000 threshold. Now, you may be thinking, 50% of $56,664 is $28,332, and Im in the 12% tax bracket, so the tax on my Social Security benefits will be $3,399.84.
Fortunately, the calculation takes other factors into account, and your tax would be a mere $225. You can read all about the taxation of Social Security benefits in Internal Revenue Service Publication 915.
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This is $5,440 over the limit. Your Social Security check will be reduced by $2,720 that year or $1 for every $2 earned. In the year you reach your full retirement age, you can.
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Why Choose Vanguard For Your Retirement Needs
Our clients share a commitment to a long-term, disciplined way of investing that’s helped millions of people retire with confidence.
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Check In On Your Pension
Although pensions arent as common as they used to be, retirees who have them should keep in mind how returning to the workforce might impact them.
It would be important to look at how this would affect their current or future pension benefit, Bickmore says. Every pension is different, be it a union or state pension, so it would be recommended to look specifically at the pension plans details.
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