Why take social security early?
If your health isn’t great
Generally, when people get over their health is not very good, so they should take the social security benefits early in their life in order to maintain their health. If your health is great, and you think that you are going to live until your 80s, then you should get your Social Security benefits at a later age.
You’re a lower earner
The rules of social security, and their claiming strategies have changed in the past few years. So according to this strategy, the people who earn less should claim their social security benefits at an early age of around 62 years and the people who are earning more should claim their social security benefits at a later age that is around 70 years.
You need income
If you are in need of money for different purposes, such as your retirement and you have not saved money.
Estimating your social security benefits
Verify your wages
The benefits that you will get at the age of 62 are less. If you want to earn more benefits then you should take your social security benefits at 70 years of age.
Adjust your wages
Your wages are adjusted by social security by using the Average Wage Index. In this the amount that you’ll get is calculated based upon those years in which you’ve earned the most. In order to keep things simple, the Social Security Administration makes a list of all the indexing factors.
Calculate your AIME
For calculating your Average Indexed Monthly Earnings you have to add your highest incomes in the past 35 years and if you have not worked for 35 years then you have to simply add your total income for the years you have worked. Then you have to divide your total income by 420.
Determine your PIA
It is based on the three percentages of AIME. You can calculate the PIA by adding these percentages.
Confirm your FRA
As discussed earlier to get the most benefits of social security you should claim it at your full retirement age. Also if you keep on working after your full retirement age then you become eligible to get additional 8% benefit. This comes under delayed retirement credits.
Social security calculator
To take the benefits of the social security calculator you have to log in into your social security page and from there you can calculate the amount that you’ll get.
Claiming both retirement and spousal benefits
If you want to qualify to get the spousal benefits then according to the Social Security Administration you both must be married at least for one year. But if you have a child then this rule does not apply. Here are a few things that you need to know
To claim the social security spousal benefits you must be of 62 years of age. Also you both must be married for one year.
You can only collect the spousal benefits after your spouse has received his/her Social Security benefits. Also if you apply for the retirement as well as spousal benefits, you will get that amount which is higher.
When you reach the age of 62 years, you can get 32.5% of the benefits that your spouse will get. This amount keeps on increasing every month and increases upto your retirement age. At your full retirement age you can get 50% benefits of your spouse’s income.
If you wait to get your social security benefits until you reach full retirement age it will help your benefits to grow.
The best time to collect benefits?
Before you claim your social security benefits you need to pay social security taxes. These taxes must be paid for approximately ten years. If you want to get your benefits early then you can start getting them at the age of 62.
But in this case you’ll get less benefits. But if you wait longer to get benefits such as till the age of 70 years, you get increased benefits. Also you get additional 8% benefits at the age of 70.
What are the taxes in retirement?
The taxes that you have to pay on your retirement income depend on various factors such as the type of income you receive, the state where you live etc. The taxes are differ for siffer types of incomes. Also the taxes differ from state to state.
Pros and cons of waiting until 70
Limit your overall income
If you wait until you reach the age of 70 years to claim your social security benefits, then your monthly payments will increase. But there is another possibility also that you may not live up to that age because there is a risk of you developing a disease. So in such a case, you should get your social security benefits early, even though you will not get that much amount that you will get in your 70s.
It is found that people who are more than 65 years old have more chances of developing serious health problems such as heart attack, heart stroke, etc. If you could not live up to the age of 70 years and did not claim your social security benefits, then all your benefits will go in vain.
Reduce your spouse’s benefit
The social security benefits are not only limited to you, but your spouse can also get the benefits of your social security if you are married. The Social Security Administration has put an option that the spouse can claim the benefits of his or her spouse’s earnings. So if you are married, then you should coordinate with your spouse in order to get the maximum benefits.
Pay for Medicare at 65
In addition to social security, Medicare is another program, which is meant to help seniors. In order to enroll in Medicare, you should be 65 years old. The people who are claiming the benefits of social security by this age, will be automatically enrolled in Medicare. But if you are not claiming your benefits at this age, then you have to enroll yourself into Medicare on your own.
The choice is ultimately yours
As we discussed above, both about the pros and cons of claiming social security at the age of 70 years, it depends upon person to person that at what age he should claim his social security benefits. This also depends upon his life situations Thus, the choice is completely of the person who has to claim his benefits.
What to consider when taking benefits?
Life expectancy
We cannot say how much the life expectancy of the person is, but everybody, depending upon the history of his family, can estimate whether he will be healthy at old age or will develop some issues such as diabetes or other. If you are working currently and taking your social security benefits as well, it has a negative impact on the amount that you will get.
Income
If you are currently working then this is going to have a major impact on your social security benefits. There are negative tax implications if you are currently working and claiming your Social Security benefits at a time.
Investments and expenses
The age at which you should start getting your benefits also depends upon your expenses, what are your family expenses and what are the investments that you have made. Depending on both these factors, you can determine the age at which you should start claiming your benefits.
The social security bridge strategy
The social security strategy is a very simple concept. As we all know the earliest age at which we could start collecting our social security benefits is 62 years. But the age at which you will get maximum benefits is 70 years.
Also all the people who are working have their full retirement age FRA at which they can collect 100% benefits.
This age at which you can collect 100% benefits is around 66 or 67 years. If you start correcting your benefits at an early age , then you will get only 70% of the total benefits, and if you collect at the age of 70 years that is later than your full retirement age, you can get around 132% of your FRA benefits.
Thus, it can be calculated that if you wait for one year, you get additional 8% benefits. This is known as the bridge strategy of Social Security. In this, you have to claim your benefits later, so that you can get additional benefits as well.
How to spot a social security scam?
These people are very convincing
The people who do scams and frauds pretend to be from the agency or the company. They will try to manipulate you not to use cash instead use other online modes to transfer money. This way you can lose your money.
Getting calls, emails or letters
You will get calls or emails or letters from unknown numbers or unknown people and they will tell you that you have to refund them a certain amount of money which they have accidentally transferred to your account. And if you do not do this, you will be arrested and some people refund money back to them and lose the money.But you should be aware of these kinds of frauds, and you should not click on any link which they provide to you.
Report it immediately
If you found yourself scammed or you found that a fraud has happened to you, you should immediately report it to the Social Security Administration. You can also report on the Social Security Administration’s official website as well as share this incident with your family and friends to make them aware.
Conclusion
In this article, we first looked at the reasons to claim social security benefits early in life. There are many reasons behind this. Age is an important factor. This is because when you get old, there are chances of you developing serious health problems, so it’s better to claim your social security benefits early.
Along with this, there are various other advantages of claiming the social security benefits which are mentioned in this article. After this, the steps to calculate your social security benefits are discussed in detail. We also came to know about the taxes that the people have to pay on the Social Security benefits.
After this, the advantages and disadvantages of claiming your benefits at a later age that is around the age of 70 years are discussed. Then we discussed a very important strategy which is known as the bridge strategy of Social Security. and at last, we discuss various Social Security scams that can happen with anyone and how to protect yourself from these scams.
