When Should I Apply For Social Security Retirement

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 parent’s 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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Are Social Security Checks Retroactive

You may be able to collect Social Security Benefits up to 6 months prior. However, if you choose to collect retroactive Social Security benefits you will lose any credits you earned during those months from delaying your retirement.

For example, say you wait until 70 years old to retire. However, when applying for your Social Security Retirement benefits, you decide to collect retroactive benefits, you will lose the benefits increase you previously received during those months.

So if you had received a 1.1% increase for each month you delay retiring, you will lose that payment increase for the months you receive a retroactive payment.

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How Your Social Security Benefits Are Earned

To be eligible for Social Security benefits in retirement, you must earn at least 40 “credits” throughout your career. You can earn as many as four credits each year, so it takes 10 years of work to qualify for Social Security.

In 2021, you must earn $1,470 to get one Social Security work credit and $5,880 to get the maximum four credits for the year.

How To Apply For Social Security Retirement Benefits

Do you plan to use Social Security Benefits soon?

Are you a young person just starting to work?

Either way, understanding Social Security benefits, how they are calculated, and how you can get the most out of them will help you to plan for your future.

This article will cover who qualifies for Social Security Benefits, the application process, and how your benefits are calculated.

It will also touch on factors to keep in mind throughout your career and when deciding the age you should apply for Social Security Benefits.

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Benefit Amounts Vary Depending On Your Social Security Retirement Age

Your Social Security retirement age and the amount you receive varies depending on several factors. For example, the earliest age you can collect your Social Security retirement benefits is 62, but there is an exception for widows and widowers, who can begin benefits as early as 60. If you start collecting benefits early and continue to work, your benefits may be reduced.

Here’s how this works with the basics on Social Security claiming ages from 60 to 70.

How Long Does It Take For Me To Receive My First Check

Once your application is approved and your benefits have been calculated you should receive a check within 30-45 days of your retirement date. If you do not receive the check and you are sure your application was approved, call your local Social Security office to learn why you havent received our check.

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How Long Does It Normally Take To Get Approved For Social Security Benefits

The Social Security approval process is relatively speedy, but as it is a government program with a huge number of applicants, you can expect to wait approximately six weeks before you get your approval for benefits. Bear in mind that this timetable only applies if everything runs smoothly. If you supply inaccurate information on your application, such as a transposed number in your birthdate or Social Security number, for example, you can expect a rejection and for the entire process to start all over again. Note that nonretirement Social Security benefits, like disability benefits, may take as long as three to five months for approval.

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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You May Be Getting Social Security Checks For A Long Long Time

Life expectancy is a critical factor in Social Security planning. Of course, no one can predict how long they will live, but according to the CDCs most recent figures, the average American who makes it to age 65 can expect to live another 19 years.

If your Social Security benefit at 70 is more than 75% higher than your benefit at 62, youre going to have a lot more money to take care of your needs as you age.

Dont forget that if youre married, the lower Social Security payment will go away when one of you passes away. If the spouse with the greater Social Security wage history waits as long as possible to file for benefits, he or she will leave behind a bigger benefit for the surviving spouse to live on.

Given that fewer and fewer Baby Boomers will have an employee pension to count on in retirement, it may make sense to maximize Social Securitys reliable income stream.

The Bottom Line On When To Claim Your Social Security

Every individuals and couples needs are different when it comes to claiming Social Security. But maybe waiting until age 70 is something we should seriously consider.

Even if youve already filed, you may find that youre eligible for a do-over. You can withdraw your application for up to 12 months after you file, and reapply later. But you only get one do-over. If it makes sense for you to do this, youll have to pay back the Social Security benefits that you received, and in many cases your IRA or 401 may be where you have to get that money.

If you arent sure which Social Security claiming strategy is the best fit for your needs and goals, talk to a financial adviser who is knowledgeable about retirement income planning and, specifically, Social Security benefits. An experienced professional can lay out all your options and help you work out a timeline.

Kim Franke-Folstad contributed to this article.

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How Long Does It Take For My Application To Be Processed

In most cases, it takes anywhere from 3 to 5 months for your application to be processed and for a decision to be made.

The process depends on how long it takes Social Security to receive your records, go over your application, confirm your documentation, and calculate your benefits.

If you provided insufficient or incorrect documents, your application may be rejected. Make sure to double-check all the documents you provide. Confirm they are up to date, correct, and original copies.

Watch Out For Hidden Costs

Youll also want to consider other lifestyle factors, especially Medicare. Americans become eligible for federal health insurance coverage at age 65, well after when you can begin to file for Social Security.

If you stop working at age 62 and lose health insurance, you have to get supplemental insurance to bridge the gap until you turn 65 and Medicare kicks in, Neiser says.

If you work during retirement, you have another incentive to delay collecting Social Security. Earning too much at a job after you begin collecting your benefit can reduce your payout, but only if you have yet to hit full retirement age.

However, when you hit full retirement age, your benefit will increase to account for any benefit that was withheld earlier due to working. Heres how much you can earn and not get hit.

If youre younger than full retirement age for all of 2021, the Social Security Administration will deduct $1 of your monthly check for every $2 you earn above $18,960 per year.

If you reach full retirement age in 2021, the administration deducts $1 of your monthly check for every $3 you earn above $50,520 until the month you reach retirement age.

Youll also owe Social Security and Medicare tax on your earnings, even if youre already receiving benefits.

So those are some potential pitfalls to claiming Social Security early.

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How Much Am I Eligible To Receive

Your Social Security retirement benefit will be determined based on a combination of your earnings record and the age at which you claim benefits. For 2021, the average Social Security retirement benefit was $1,555. For 2022, the maximum possible retirement benefit is $4,194. To maximize your benefit, youll have to claim your benefits at age 70 and max out your earnings throughout your career.

When To Apply For Social Security

As stated above, you are eligible to apply for Social Security retirement benefits when you are 61 and nine months. You can start collecting benefits as soon as you turn 62.

However, just because you can, does not mean that you should.

The longer you delay starting your benefits, the more your monthly income will be. In fact, the difference in lifetime income between starting at age 62 and waiting until your maximum retirement age can be more than $100,000 and for many people much much more.

While you can start benefits at age 62, the Social Security Administration considers that early. Depending on your birth year, you do not reach what the SSA calls full retirement age until sometime between ages 66 and 67.

• For every month prior to your full retirement age that you begin taking benefits, around 0.55% is deducted from your payout.
• And, for every year that you defer your benefits, you will receive a larger amount when you finally do begin drawing Social Security. The amount of the bonus is dependent, once more, on your birth date. For example, someone born in 1944 has a full retirement age of 66. If they start benefits at age 69, they will receive eight percent more benefits for each year they delay.

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What To Consider When Deciding The Best Age For Social Security Benefits

Youll receive reduced monthly benefits permanently if you start taking them before you reach full retirement age. And the reductions arent small. This breakdown summarizes how much you can lose depending on when you get your retirement benefits:

• Benefits are reduced by 30% if you opt to start receiving benefits just five years early.
• If you wait until you full retirement age youll receive 100% of your benefits.
• You can also elect to postpone benefits beyond full retirement age, up until you are 70.
• The monthly amount you will receive in the future increases each month you wait to start receiving benefits.
• If you can wait until the last possible month, your check will be 132% of the full retirement benefit.

For a fuller comparison, this table from the Social Security Administration shows how much you could get if you retire at age 62 based on your birth year:

So, its almost always best to delay Social Security benefits for as long as you can. If you plan to work in retirement, youll definitely want to delay. Youll face a penalty if you continue to work after you claim early retirement benefits and earn more than the yearly earnings limit, which for 2020 is $18,960. This means that the Social Security Administration will deduct $1 from benefits for every $2 that you earned over $18,960.

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 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. But you are 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 within the first 12 months of receiving benefits, pay back the years’ worth of benefits you received, go back to work, and then wait until a later age to restart your benefit checks at a higher level.

For important details about repaying benefits please read the SSA publication If You Change Your Mind.

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If You Work While Getting Social Security

Yes, you can work full or part-time while also getting Social Security retirement benefits. However, if you have not yet reached your full retirement age, and if your net income from working is higher than the annual earnings limit, your annual benefits will be reduced. Beginning in the month you reach full retirement age, Social Security will stop reducing your benefits no matter how much you earn.

During any full calendar year in which you are under full retirement age, Social Security deducts $1 from your benefit payments for every $2 you earn above the annual net income limit. The income limit changes every year. In 2017, the income limit was $16,920.

What Are The Steps To Get Approved For Social Security

The actual steps to get approved for Social Security are fairly straightforward. According to the Social Security Administration, heres what youll need to do:

• Gather the information and documents you need to apply.
• Complete and submit your application, typically online.
• They will review your application and contact you if they need more information.
• They will mail you a decision letter.
• You start receiving your retirement benefits.

The specifics regarding your application are slightly more involved. Heres the information youll need to know.

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What Are Social Security Credits How Are They Earned

Social Security credits determine eligibility and benefit amounts in retirement. In 2021, earning $1,470 in income qualifies as earning one Social Security work credit.2 You are eligible to earn up to four credits per year. Most people need 40 credits to qualify for Social Security benefits though younger individuals require fewer credits for disability benefits or for their family members to receive survivors benefits.

Factors That Affect Social Security Benefits

The math seems to say that everyone should wait until age 70 to reap the best benefits, but this isnt always the case. There are times when it might make sense to start collecting earlier. If, for example, you are in poor health or if the family breadwinner is ill and can no longer work, collecting before your full retirement age could help prevent debt from mounting up.

Your marital status also plays a factor. If youre single and in poor health, you could end up using your savings to pay for medical bills between the ages of 66 and 70. In this case, you might be better off collecting Social Security benefits at a lower rate than holding out for the higher payments youd receive at age 70.

If, however, youre single, in good health and either still working or have plenty of savings, consider waiting until age 70 in order to benefit from the higher payments.

With married couples, it could be best for the spouse who earns the most money to hold off until 70, while the spouse who makes less starts collecting at 62. This approach will ensure that when one of you passes away, the surviving spouse will receive the higher benefitsgenerally the amount their spouse would have received at age 70, even if the spouse died before that age.

For more help with retirement planning, consider contacting a Certified Financial Planner. They can help you ensure youre maximizing your Social Security benefits and answer any questions you have about your other assets.

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What About Taxes On Social Security

Keep in mind that Social Security benefits may be taxable, depending on your “combined income.” Your combined income is equal to your adjusted gross income , plus non-taxable interest payments , plus half of your Social Security benefit.

As your combined income increases above a certain threshold , more of your benefit is subject to income tax, up to a maximum of 85%. For help, talk with a CPA or tax professional.

In any case, if you’re still working, you may want to postpone Social Security either until you reach your full retirement age or until your earned income is less than the annual limit. In no situation should you postpone benefits past age 70.