If you are nearing retirement age, you are likely ready to take advantage of the benefits your career has earned you. If you live in America this of course includes Social Security. But in order to insure you receive maximum benefits from this government program you need to know how the application is scored before you apply. Following the guidelines listed in this article will assist you in making the best decisions for you and your spouse when it comes to the monthly benefits you receive.
There are several decisions you need to make when before filling out your Social Security application. Are you going to apply early (age 62) or wait until your full retirement age (age 66)? If you are married, you must calculate if it is better to apply based on you or your spouse's earnings. When do you want your spouse to begin receiving benefits? How will your benefits be affected if you or your spouse dies? How does being divorced or widowed affect your Social Security payments? All of these questions need to be considered in advance.
APPLICATION
The first thing to understand is that your benefits will be based on your top 35 years of earnings. Recognizing that most people earn more in the last years of their career, it is quite beneficial to continue working if you can add more high earning years to your portfolio. Working just one or two more years with a high salary could substantially increase the amount of Social Security benefits you receive during retirement.
The simple answer for when to retire is to delay it as long as you can. For every year you retire early your Social Security benefit will be adjusted lower. If you retire at age 62 then you will get the maximum reduction of 25%. On the other hand, waiting until full retirement age will increase your monthly benefits by as much as 30%.
Married individuals have the option of collecting Social Security retirement benefits based on their own earnings, or they can collect half of the spouse's benefit. If both parties have worked most of their lives then this will take some planning and calculation. In short, if a spouse has earned significantly more over their career then it is likely the half benefit is more beneficial. However, it is essential to do the math before finalizing your application.
In cases of divorce, if you were married to your ex-spouse for 10 years or more and you are not currently married then you are eligible to receive up to 50% of your ex's benefits. Again you will need to calculate the advantages of this scenario, but if your spouse earned considerably more it is likely the best route to take. Note that using the ex-spouse benefit does not affect their benefits in any way.
The final topic we will discuss here is working during retirement. If you opt to collect Social Security early there is maximum earnings cap you must adhere to if you want to continue receiving benefits. However, once you reach full retirement age the earnings cap goes away. This is another reason to delay your application until full retirement. You will continue to pay Social Security taxes on your earnings, but if your earnings swell after retirement your benefits will be recalculated to include your latest contributions.
These are some simple guidelines to keep in mind when before submitting your Social Security application. The application process itself is not overly complicated, but your decisions about how you apply are very important. Those with complex histories are advised to speak with a professional before progressing with the application. Doing so could add hundreds of dollars to your monthly benefits.
Application Guidelines for Social Security Retirement Benefits APPLICATION
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