Recently, I took the time to look at my options and outcomes on when to collect social security benefits when retiring. I've been curios off and on over the years on how much I would be entitled upon retiring.
As I get closer to retiring, there are some things to consider when making that important decision.
ELIGIBILITY REQUIREMENTS
Social security taxes are taken out of your paycheck so you can get a monthly benefit in your 60s. Although, these days, quite a few people are considering retirement before 60 but not taking retirement benefits until full retirement age.
On the https://www.ssa.gov/retirement/eligibility website, it states the following:
On the https://www.ssa.gov/retirement/eligibility website, it states the following:
You're eligible if:
- You're 62 or older
- You've worked and paid Social Security taxes for 10 years or more
They keep track of how many years you've paid social security taxes.
PLAN FOR RETIREMENT
You can plan for monthly retirement benefit any time between age 62 and 70. Social security calculates your payment by looking at how much you've earned throughout your life. The higher the longer you wait to apply, up until age 70. It's really up to you when you'll collect and based on your own personal needs. Personally, I may take it at my full retirement age which on social security states for my age of birth, is 67 years old.
There's some other factors that can affect your amount of retirement monthly benefit.
- Paying for healthcare - eligible to get Medicare at age 65 and the sign-up process for Part A (Hospital Insurance) and Part B (Medical Insurance) is completed through Social Security. Once you sign up for Part B, the cost will be taken out of your monthly benefit amount. Plan ahead for this reduction.
- Withholding taxes from benefit payments - you may pay federal taxes on your benefits if your combined income (50% of your benefit amount plus any other earned income) exceeds $25,000/year filing individually. You can pay the IRS directly or have taxes withheld from your payment.
- Continuing to work - Before Full Retirement Age (between age 66 and 67), your benefit payment will be temporarily reduced if you earn more than your earnings limit this year. You can work after (FRA) and earn as much as you'd like without reducing your benefit payment.
- Knowing your "Full Retirement Age" - (FRA) is a point in time between age 66 and 67, which social security use to determine your benefit amount, as well as your family's benefits. Regardless of your (FRA), your payment will be higher the longer you wait to apply, up until age 70.
SOURCE: https://www.ssa.gov/prepare/plan-retirement
There's so much to consider in deciding when to receive benefits. In my case, I have to think of the following:
- HOW MUCH TO RETIRE - do I have enough in addition to Social Security?
- COST OF LIVING - will my way of living be less or more?
- CHOOSING AGE TO RETIRE AND COLLECT - do I really need to wait until (FRA) or age 70 to get maximum
It's quite daunting at first, but if I do careful planning I just might make the right move on this.
Stay tuned as my decision might be sooner versus later.
