By Kirk Larson
Social Security
Washington Public Affairs Specialist
Let me share some basic questions that are commonly asked during our educational presentations about retirement benefits.
Social Security is part of the retirement plan of almost every American worker. If you’re among the 96 percent of workers covered under Social Security, you should know how the system works.
Learn about your retirement benefits as we answer some questions commonly asked during our educational presentations.
Social Security is often asked, “What’s the best age to start receiving retirement benefits?” The answer is: There’s no one “best age” for everyone and, ultimately, it’s your choice. The most important thing is to make an informed decision.
Your decision is a personal one.
Would it be better for you to start getting benefits early with a smaller monthly amount for more years, or wait for a larger monthly payment over a shorter timeframe? The answer is personal and depends on such factors as your current cash needs, your health and family longevity.
Also, you need to consider if you plan to work in retirement and if you have other sources of retirement income. You must also study your future financial needs and obligations.
This decision affects the monthly benefit you will receive for the rest of your life and may affect the benefit protection for your survivors.
Q. When can I start my benefits?
A. We calculate your basic Social Security benefit — the amount you would receive at full retirement age — based on your lifetime earnings. However, the actual amount you receive each month also depends on when you start receiving benefits.
You can start Social Security retirement benefits as early as age 62, but the amount you receive will be less than your full retirement benefit amount. Your monthly retirement benefit will be greater if you delay starting it. You can visit www.socialsecurity.gov/planners/retire/ageincrease.html to find your full retirement age.
Q. If I start my benefits early, how much of a reduction will I take?
A. Your benefits will be reduced based on the number of months (a little more than 0.5 percent per month) you will receive benefits before reaching your full retirement age. You could take a 25 to 30 percent reduction if you start early.
Let’s say you turn 62 in 2017, your full retirement age is 66 and 2 months, and your monthly benefit starting at that age is $1,300. If you start getting benefits at age 62, Social Security will reduce your monthly benefit 25.8 percent to $964. This decrease is usually permanent.
Q. If I wait to take my benefits after my full retirement age, will they be larger?
A. Yes, your benefits keep growing until age 70. If you choose to delay getting benefits after your full retirement age, you would increase your monthly benefit at the rate of 8 percent per year. In our example case, your benefits would grow to $1,698.
The benefit at age 70 in this example is 76 percent more than the benefit you would receive each month if you start getting benefits at age 62 — a difference of $734 each month.
Q. Can I work after I start my Social Security retirement payments?
A. You can get Social Security retirement benefits and work at the same time. However, if you are younger than full retirement age and make more than the yearly earnings limit, Social Security will reduce your benefit.
We use the following rule to reduce your benefits: If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2017 that limit is $16,920.
In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit, but we only count earnings before the month you reach your full retirement age. If you will reach full retirement age in 2017, the limit on your earnings for the months before full retirement age is $44,880.
Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings.
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