Retirement

Your Filing Age For Social Security Impacts Your Lifetime Benefits

There is a right and wrong age when it comes to filing for Social Security benefits.

The key to determining the right age for you is accurately analyzing your situation, understanding all your claiming options, and deciding which strategy is the best for you in relation to your overall financial planning.

Never make this decision based on emotion or fear. Everyone’s situation is different and there are no “rules of thumb” relating to the ideal or perfect universal filing age.

Your filing age should be the age that maximizes your overall lifetime benefits and fits into your retirement financial plan. This is especially critical for married couples who on average will receive $1,500,000 in benefits over their expected lifetime. It may be best for one spouse to wait to file while the other spouse files early. In addition to the financial considerations, you also need to consider your cashflow requirements, your health, your projected longevity, and how long you plan on working and living.

There are three time periods as to when you can file for Social Security benefits, and they all revolve around your “full retirement age.”

Keep in mind there are three stages – BEFORE your full retirement age, AT your full retirement age, and AFTER your full retirement age. This article explains the factors you need to consider when filing at these three time periods.

Before Full Retirement Age – Age 62 To Full Retirement Age:

Reduced Benefits: Any time you file for benefits early, between age 62 and the full retirement age of 66 to 67, benefits will always be reduced. Depending on your age, your Primary Insurance Amount (amount received at your full retirement age) can be reduced by as much as 30%.

Annual Earnings Limitation: Required withholding of monthly Social Security benefits if wages or self-employment income exceeds $22,320 in 2024. For every $2 in excess of this amount, Social Security will withhold $1 in benefits. The important thing here is you never lose your benefit. If you live to life expectancy the withheld amounts are paid back to you in a higher monthly benefit amount. So effectively you receive the same amount as if you did not exceed the earnings limitation.

Windfall Elimination Provision (WEP): may apply for “non covered” pensions and will reduce the benefit of the person applying for Social Security who is also paid by a State, County or Municipality who covers their employees and does not pay into Social Security. This reduction will never reduce your Social Security benefit to zero.

Government Pension Offset (GPO): may apply for “non covered” pensions and will reduce the benefit of a person applying for Social Security benefits as a spouse, ex-spouse or as a survivor who is also paid by a State, County or Municipality who covers their employees and does not pay into Social Security. This reduction can reduce your Social Security spousal, ex-spousal, or survivor benefit to zero.

Taxable: benefits may be taxable if your combined income is more than $25,000 for singles, head of household or qualifying widow. For married couples, the combined income limit is $32,000. Combined income is the sum of 50% of your Social Security benefits added to all other income including tax-exempt interest.

Income Related Material Adjustment Amount-(IRMAA): Medicare beneficiaries are assessed a surcharge for Part B and Part D premiums if their modified adjusted gross income exceeds $103,000 for singles and $206,000 for marrieds.

At Full Retirement Age – Age Ranges From 66-67:

The full retirement age ranges from 66 to 67 and is determined by your year of birth. At full retirement age, you receive 100% of your Primary Insurance Amount.

Restricted Application: a claiming option at full retirement age or later if you were born before January 2, 1954, which allows you to collect spousal benefits only while deferring your own worker benefit. Spouse needs to be receiving their benefit.

Annual earnings limitation: no longer applies.

Voluntary Suspension: at full retirement age or later, the ability to suspend your own worker benefit and earn delayed retirement credits.

Windfall Elimination Provision (WEP): may apply for “non covered” pensions and will reduce the benefit of the person applying for Social Security who is also paid by a State, County or Municipality who covers their employees and does not pay into Social Security. This reduction will never reduce your Social Security benefit to zero.

Government Pension Offset (GPO): may apply for “non covered” pensions and will reduce the benefit of a person applying for Social Security benefits as a spouse, ex-spouse or as a survivor who is also paid by a State, County or Municipality who covers their employees and does not pay into Social Security. This reduction can reduce your Social Security spousal, ex-spousal, or survivor benefit to zero.

Taxable: benefits may be taxable if your combined income is more than $25,000 for singles, head of household or qualifying widow. For married couples, the combined income limit is $32,000. Combined income is the sum of 50% of your Social Security benefits added to all other income including tax-exempt interest.

Income Related Material Adjustment Amount-(IRMAA): Medicare beneficiaries are assessed a surcharge for Part B and Part D premiums if their modified adjusted gross income exceeds $103,000 for singles and $206,000 for marrieds.

After Full Retirement Age – Full Retirement Age to Age 70:

Delayed Retirement Credits 8% per year: Increase in monthly Social Security benefits if you delay claiming benefits after your full retirement age. Delayed retirement credits only accrue to your own Social Security benefit. These credits are awarded up to the age of 70. Your Primary Insurance Amount can be increased by as much as 32%.

Retroactive Benefits: if you have earned delayed retirement credits, the ability to receive a maximum of up to 6 months benefits up front when you claim your Social Security benefit. The effect of this is to push your retirement filing date back creating a lower monthly Social Security benefit going forward and a smaller survivor benefit in the future.

Annual earnings limitation: no longer applies.

Windfall Elimination Provision (WEP): may apply for “non covered” pensions and will reduce the benefit of the person applying for Social Security who is also paid by a State, County or Municipality who covers their employees and does not pay into Social Security. This reduction will never reduce your Social Security benefit to zero.

Government Pension Offset (GPO): may apply for “non covered” pensions and will reduce the benefit of a person applying for Social Security benefits as a spouse, ex-spouse or as a survivor who is also paid by a State, County or Municipality who covers their employees and does not pay into Social Security. This reduction can reduce your Social Security spousal, ex-spousal, or survivor benefit to zero.

Taxable: benefits may be taxable if your combined income is more than $25,000 for singles, head of household or qualifying widow. For married couples, the combined income limit is $32,000. Combined income is the sum of 50% of your Social Security benefits added to all other income including tax-exempt interest.

Income Related Material Adjustment Amount-(IRMAA): Medicare beneficiaries are assessed a surcharge for Part B and Part D premiums if their modified adjusted gross income exceeds $103,000 for singles and $206,000 for marrieds.

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