It May Not Be Ideal But It Is Possible With The Right Strategy
For many people, the goal is to be able to treat Social Security as a supplement to retirement savings and income. The average monthly retirement benefit is $1,485.63, whichdepending on where you live and your expensesmay or may not be enough to live comfortably. So if you’re approaching retirement having saved less than you’d like, and hope to live on Social Security alone, you’ll need a game plan to make it work.
Retiring In The Usa Is Much More Expensive Than You Think
If this was not your situation, then your monthly expenses would be considerably higher than the article estimates. And honestly, the total monthly expenses still were not covered by Social Security alone. You had to have a source of income or assets that could fill the gap between Social Security and total monthly expenses.
And what if you didnt like your first choice? Maybe it was too hot, or too cold, too wet or too dry. Could you afford to move?
And finally, the authors decided that weather isnt important to retirees. Because over half were located in the northern half of the country, where long winters with heavy snows were common. No thank you!
Is the answer to just forget about retirement and continue working? Absolutely not! I think I have found a better solution!
Social Security And Banking
Yes, we still receive our social security for life regardless of where we choose to live. It gets deposited to our U.S. bank account every month. We do have a bank account in Colombia, but we only transfer what we need for living expenses. And I have found a very inexpensive way to transfer dollars from our U.S. bank to Colombia.
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Why Did The Full Retirement Age Change
Full retirement age, also called “normal retirement age,” was 65 for many years. In 1983, Congress passed a law to gradually raise the age because people are living longer and are generally healthier in older age.
The law raised the full retirement age beginning with people born in 1938 or later. The retirement age gradually increases by a few months for every birth year, until it reaches 67 for people born in 1960 and later.
Timing And Your Health Coverage
Your health insurance coverage can also play a role in deciding when to claim Social Security benefits. Do you have a health savings account to which you would like to keep contributing? If so, note that if youre age 65 or older, then receiving Social Security benefits requires you to sign up for Medicare Part A, and once you sign up for Medicare Part A, youll no longer be allowed to add funds to your HSA.
The SSA also cautions that even if you delay receiving Social Security benefits until after age 65, you might still need to apply for Medicare benefits within three months of turning 65 to avoid paying higher premiums for life for Medicare Part B and Part D.
In 2022, the average monthly premium for Part D will be $33 per month versus $31.47 in 2021. If you enroll in a Medicare Advantage plan, the average monthly premium will be $19 per month in 2022 versus $21.22 in 2021. However, if you are still receiving health insurance from your or your spouses employer, you might not yet have to enroll in Medicare.
As of Oct. 16, 2021, Social Security offices are only open by appointment, and to get an appointment you need to be in a limited, critical situation. Most people will have to transact their business online, by phone, or through the mail.
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Is Putting Off Retirement The Answer
Many people put off retirement and keep working, hoping that things will look better in a couple of years. But there are several problems with that.
- First, while we continue to work, we incur significantly higher expenses than we will when we retire. These include much higher housing costs, one or two late-model cars, and all the related costs, more dining out expense, clothing, healthcare, higher income taxes, expensive vacations, etc. All these take a big chunk out of what we are making and may not leave that much in additional savings.
- Second, we arent getting any younger. All those things we planned to do when we quit work get moved back to years when we may not be physically capable.
- Third, what experiences and adventures could you have if you werent working? Could you hike to a waterfall? Or walk down to your favorite restaurant, meet some new friends and have a great meal for half what it would cost where you live now? Could you have the Retirement Adventure you have always wanted? Yes, yes, and yes! I know, because my wife and I have been doing it for the last 3 years.
Wouldnt you rather enjoy retirement now than put it off for years?
Will you get ahead? Are you getting closer to being able to cover your expenses when you do finally retire? Or will you look at the situation a year or two later and still not have enough? Will you be able to say Yes, I can retire on Social Security?
Why Optimizing Social Security Benefits Only Gets You So Far
Optimizing Social Security benefits has a limited impact on the income you’ll end up with as a senior.
See, there’s a cap on how much you can raise your benefits. And some of the steps you’d need to take to make a substantial impact can be a challenge.
If you hope to increase your Social Security payments by delaying benefits, you’ll be able to boost your standard benefit by 2/3 of 1% per month for each month you delay claiming it after hitting full retirement age.
However, you can only raise your benefit this way until you turn 70. Full retirement age is between 66 and four months and 67, depending on your birth year. If your FRA is 67, the best you can do is raise your check amount by 24% if you wait until 70 to start benefits. Not everyone can wait that long because they may be forced out of the workforce sooner and need their Social Security income to live on.
Increasing income and boosting your average wage can potentially have more of an impact. But since Social Security determines benefits based on average income during the 35 years you earned the most, you’d need to raise your income pretty early in your life and continue to earn a high salary for decades to make a noticeable impact.
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Learn The Claiming Strategies That Yield The Highest Income
For millions of Americans, the most anticipated upcoming birthdays aren’t whole numbers but fractions, like 66 and 2 months, or 66 and 4 months. That’s because, for Americans born between 1955 and 1959, full retirement age occurs sometime between their 66th and 67th birthdays. At that point, people can start claiming their full Social Security benefits.
How, exactly, does Social Security work after you reach that magical full retirement age? Here are a few important facts to bear in mind.
Doing A Breakeven Analysis And Other Ways To Decide How Soon To Start
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A Tea Reader: Living Life One Cup at a Time
If youre about to retire, you may be wondering whether you should start claiming your hard-earned Social Security benefits now. Here are a few key factors to consider in making that decision.
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What Is Full Retirement Age
The size of your monthly Social Security benefit depends on a few factors, including how much you earned over the years, the year you were born, and the age when you start claimingdown to the month.
Youll receive your full monthly benefit if you start claiming when you reach what Social Security considers your full retirement age , sometimes also referred to as normal retirement age. FRA was 65 when Social Security began, but it has been raised to 67 for anyone born in 1960 or later. To find your FRA, see the chart below.
|Finding Your Full Retirement Age|
Do Survivor Benefits Increase After Full Retirement Age
If you are the surviving spouse who is claiming benefits based on your deceased partner’s work record, there is no benefit to waiting until after FRA to claim your benefits. You do not earn delayed retirement credits, so your benefit will not increase.
However, if you are the higher-earning spouse, delaying your claim for benefits until after FRA can result in your widow receiving more monthly income, as your widowed partner will receive the higher of the two monthly benefits you were each receiving.
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After Research Go Check It Out For At Least 3 Months
We did lots of research about Costa Rica. We even visited it for a few days and drove through to fly home several times. But the proof comes from actually going and trying to live there. Here is our experience. After all that, we tried living in San Jose during February 2018. We hated it! It was the most expensive place we have lived since we left Houston. There was no convenient public transportation. Eating out was cost-prohibitive. I honestly believe I could live more cheaply in Houston, Texas than in San Jose, CR. And frankly, we didnt feel like the Ticos wanted us there except for the American money we brought. So we left after 1 month!
Does Working After Full Retirement Age Increase Social Security Benefits
Working after full retirement age could increase your Social Security benefits. Your benefits are based on average wages over your 35 highest-earning years .
Even after you’ve reached full retirement age, and even if you’ve already claimed benefits, the Social Security Administration continues to recalculate your average annual wage to account for new income. If your earnings after FRA are higher than previous years and raise your average wage for your 35 top-earning years, your benefits could rise accordingly.
Working While Receiving Benefits
You may work after you start receiving benefits, which could mean a higher benefit for you in the future. We may withhold some of your benefits if you earn more than the yearly earnings limit. Sometimes people who retire in mid-year already have earned more than the annual earnings limit. However:
- We have a special rule that applies to earnings for one year, usually the first year you begin receiving benefits. This means we cannot withhold benefits for any month we consider you retired, regardless of your yearly earnings.
- After you reach full retirement age, we will recalculate your benefit amount to take into account any months you did not receive benefits because your earnings were too high.
How To Find The City That Fits You
Cost is only one reason to choose where to live in retirement. You may want to stay close to children and grandchildren. Strong friendships or community ties might also keep you in a certain location, even if where you live is no longer tied to a job.
Quality healthcare, good options for active lifestyles, and a pleasant climate are other factors to consider when you decide where to retire. If relocation is an option for this new chapter of your life, take comfort knowing that many U,S, cities offer a quality lifestyle that you can afford.
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Can I Retire At 55 Social Security
Can i retire at 55 social security? So can you retire at 55 and collect Social Security? The answer, unfortunately, is no. The earliest age to begin drawing Social Security retirement benefits is 62.
When can a 55 year old collect Social Security? You can start your Social Security retirement benefits as early as age 62, but the benefit amount you receive will be less than your full retirement benefit amount.
Can I retire at 57 and collect Social Security? You can start your Social Security retirement benefits as early as age 62, but the benefit amount you receive will be less than your full retirement benefit amount.
What is the earliest age to retire for Social Security? The earliest a person can start receiving Social Security retirement benefits will remain age 62. Social Security benefits are reduced for each month a person receives benefits before full retirement age.
D You Can Stop Working And Not Begin Receiving Your Retirement Benefits
We calculate your benefits based on your highest 35 years of earnings. If you stop working before you have 35 years of earnings, or you have low earnings for some years, this will affect your benefit calculation. However, if you wait to start benefits after you reach full retirement age, your benefits will increase for each month you do not receive them until you reach age 70. There is no incentive to delay filing for your benefits after age 70.
If you are not receiving your Social Security benefits when you turn 65, you will need to apply for Original Medicare three months before you turn 65. If you dont sign up for Medicare Part B when youre first eligible at age 65, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.
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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 the Internal Revenue Service Publication 915.
B You Can Stop Working And Start Receiving Your Retirement Benefits
If you make the decision to stop working and start receiving retirement benefits before your full retirement age, your benefits are reduced a fraction of a percent for each month before your full retirement age. Also, your benefits will not increase because of additional earnings.
We calculate your benefits based on your highest 35 years of earnings, and if you stop working before you have attained 35 years of earnings or you have years with low earnings, this will affect your benefit calculation.
If you delay your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your benefit.
If you stop working and start receiving retirement benefits before age 65, you are automatically enrolled in Original Medicare when you turn 65. If you are not receiving your Social Security benefits when you turn 65, you will need to apply for Medicare benefits three months before you turn 65. If you dont sign up for Medicare Part B when youre first eligible, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.
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You Can Retire On Social Security Outside The Usa
Have you ever considered moving outside the USA? I dont mean give up your citizenship. I would never do that! But what if you change your residence? The featured image for this article is a photo of Antigua, Guatemala. Visiting there should be on your bucket list!
We started to look outside the USA. We wanted comfortable temperatures, lower cost of living, good healthcare, quality of life, and places that were popular with other Americans like us. But that raised many more questions.
How To Calculate Social Security Benefits
Lets say your FRA is 66. If you start claiming benefits at age 66 and your full monthly benefit is $2,000, then youll get $2,000 per month. If you start claiming benefits at age 62, which is 48 months early, then your benefit will be reduced to 75% of your full monthly benefitalso called your primary insurance amount. In other words, youll get 25% less per month, and your check will be $1,500.
That reduced benefit wont increase once you reach age 66. Rather, youll continue to receive it for the rest of your life. It may go up over time due to cost-of-living adjustments , but only slightly. You can do the math for your own situation using the Social Security Administration Early or Late Retirement Calculator, one of a number of benefit calculators provided by the SSA that can also help you determine your FRA, the SSAs estimate of your life expectancy for benefit calculations, rough estimates of your retirement benefits, individualized projections of your benefits based on your personal work record, and more.
Although the cost-of-living adjustments announced each year are usually only slight increases, Social Security benefits will increase by 5.9% in 2022, marking the largest increase since 1982.
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