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The most common age for applying for social security is 62, but waiting until the age of 70 to start receiving benefits will bring you a lot more money. For example, if you have reached retirement age at age 67 and you do not start collecting your benefits before the age of 70, your payment will be 77% higher than the amount you paid. would otherwise have perceived at 62 years old. Here's how: you can get a lot at age 70 based on your year of birth and some tips for deciding whether or not to file a social security claim.
Deferred retirement credits of social security
You will receive only 100% of the social security benefits you have earned if you deposit them at retirement age, which varies depending on your year of birth. For people born between 1943 and 1954, the age of full retirement is 66, but for those born after 1954, it increases by two months a year up to age 67 for those born in 1960 or later.
Source of the image: Getty Images.
You can start receiving benefits as early as age 62, but Social Security is designed to pay you the same amount of lifetime benefits, no matter how old you are when you start receiving them. You will get less money each month if you file an application. benefits before retirement age and more money if you file an application after the retirement age.
Specifically, Social Security will reward you with deferred retirement credits that will increase monthly Social Security income by a fixed percentage for each month elapsed. When introduced in 1972, deferred pension credits increased benefits by 1/12 of 1% for each expected month (1% per annum) to 72 years. In 1983, the rules changed so that today, they increase to 2/3 of 1% per month (8% per year) until 70 years of age.
The exact amount of increase depends on the year of your birth:
| Increase in deferred retirement benefits by year of birth | ||
|---|---|---|
| year of birth | Monthly credit | Annual credit |
| 1916 or earlier | 1/12 of 1% | 1% |
| 1917-1924 | 1/4 of 1% | 3% |
| 1925-1926 | 7/24 of 1% | 3.50% |
| 1927-1928 | 1/3 of 1% | 4% |
| 1929-1930 | 3/8 of 1% | 4.50% |
| 1931-1932 | 5/12 of 1% | 5% |
| 1933-1934 | 11/24 of 1% | 5.50% |
| 1935-1936 | 1/2 of 1% | 6% |
| 1937-1938 | 13/24 of 1% | 6.50% |
| 1939-1940 | 7/12 of 1% | 7% |
| 1941-1942 | 5/8 of 1% | 7.50% |
| 1943 or later | 2/3 of 1% | 8% |
Source: Social Security Administration.
How much can I get at age 70?
Since credits increase the amount you would normally have received at retirement age (FRA), it helps to understand how Social Security calculates your FRA benefit.
To determine your FRA benefit, Social Security adjusts the inflation rate on your 35 highest earning years to determine your average monthly salary over the course of your career. Then, it reduces this amount by a fixed percentage to specific income thresholds, called flex points, to determine your FRA benefit. The percentage of your average historical monthly income for which you get a credit is set by law, but the income thresholds used for each inflection point are determined annually by Social Security according to inflation. wage.
|
Fixed income percentages used in calculating curvature points |
||
|---|---|---|
|
Up to the first point of curvature |
Between the first and second curvature points |
Above the second point of curvature |
|
90% |
32% |
15% |
Source: Social Security Administration.
The formula is complex, but do not worry, social security does the math for you. You can find out about your FRA advantage by logging into the Social Security website.
Once you know your FRA payment, you can calculate your 70-year-old benefit by multiplying this amount by the percentage increase associated with your delayed retirement credits, as shown in the table below.
| year of birth | Age of complete retirement | % Paid according to the age at which you claim | ||
|---|---|---|---|---|
| 66 | 67 | 70 | ||
| 1943-1954 | 66 | 100 | 108 | 132 |
| 1955 | 66 months | 98 8/9 |
106 2/3 |
130 2/3 |
| 1956 | 66 months | 97 7/9 |
105 1/3 |
129 1/3 |
| 1957 | 66 months | 96 2/3 |
104 | 128 |
| 1958 | 66, 8 months | 95 5/9 |
102 2/3 |
126 2/3 |
| 1959 | 66, 10 months | 94 4/9 |
101 1/3 |
125 1/3 |
| 1960 and later | 67 | 93 1/3 |
100 | 124 |
Data source: Social Security Administration.
You will notice on the board that people born more recently will receive a lower increase than those born a while ago. For example, if you were born in 1960 or later, your FRA is 67, so waiting 70 years would give you an increase of 24% (three years x 8% per year). Alternatively, if you were born before 1954, your FRA is 66, so you expect an increase of 32% (four years x 8% per year).
Source of the image: Getty Images.
Why wait can make sense
Holding up to 70 years gives you a nice increase in benefits, especially when you compare your 70-year benefits to those of 62-year-olds.
If you claim earlier than the retirement age, Social Security reduces your 5/9 FRA benefit by 1% for the first 36 months pre-empted and by 5/12 by 1% per month for each month additional demand. As a result, people who reach retirement age at age 66 receive only 75% of their FRA benefits at age 62, and those with a retirement age of 67 do not receive than 70% of their FRA benefits.
Assuming a profit of US $ 1,000, people with retirement age at age 67 would receive only $ 700 per month by claiming $ 62, or about 56 per cent of the $ 1,240 per month that They would touch at age 70.
The wait also has other advantages. For example, if you start receiving your benefits earlier than the retirement age, your social security income will be withheld if you earn more than a fixed limit each year. However, there is no earnings criterion once you have reached the retirement age, so you can work as much as you want and pocket all of your social security benefit at 70%. years.
In addition, if your spouse will receive survivor benefits after your departure, the amount will be based on your benefits and the age of your spouse. A spouse who has reached the retirement age will reach 100% of the amount you collect while you were alive. Delaying can be a good way to ensure the financial security of your spouse.
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