Posted on 08/02/2018 9:22:46 AM PDT by Red Badger
Social Security benefits can be claimed at any point after a recipient turns age 62, and most Americans take their Social Security as soon as they can. Claiming benefits early can be smart, but it can pay off to wait. If you're deciding when to start receiving Social Security, here's what to consider. Estimate your expenses
Retirement usually means a big drop in income, and if you don't have a solid grasp on what your spending is going to look like in retirement, then you won't be able to make the best decision on when to claim.
Depending on who you talk to, experts usually recommend budgeting for 70% to 80% of your pre-retirement income to cover expenses in retirement. However, the exact amount you'll need depends on your specific situation.
According to the Bureau of Labor Statistics (BLS), retirees spend the most money on home mortgages and auto loans, so if those loans won't be paid off when you retire, you'll need to budget accordingly. Overall, the BLS reports that the average 65-plus household spends about $45,221 per year, and housing and transportation account for $15,711 and $6,830 per year, respectively.
Healthcare is another big expense in retirement, and it's usually smart to over-budget when it comes to planning for those expenses. If you're healthy, your costs might not increase significantly at first, but you'll likely require more healthcare as you get older, and that healthcare won't be cheap. Healthcare spending in over-65 households totals $5,877 per year, according to the BLS, including $4,029 for health insurance and another $694 for medicine. Fidelity Investments estimates that a couple retiring at 65 this year will fork out over $275,000 in healthcare expenses during their retirement, and ultimately, the tally could be tens of thousands of dollars higher than that if you need long-term care at some point, too. Social Security options
If you've paid into Social Security over a career lasting at least 10 years, there's a good chance you'll qualify for benefits.
You can claim your benefits when you turn 62, but you'll receive a reduced payment. If you go the claim-early route, apply three months before you turn 62, so that you can receive your first check in the month after you turn 62.
If you want to receive 100% of the benefit you're eligible for, you'll need to wait until you reach your full retirement age to claim. Your full retirement age depends on the year in which you were born, but for people turning 62 in 2018, it is 66 years and 4 months.
Your third option is to wait until after your full retirement age to claim so that you can receive delayed retirement credits. These credits increase your payment for every month beyond your full retirement age that you delay. Overall, delaying increases your benefit by 8% for every year you hold off, until age 70.
The following chart shows how much a Social Security recipient would receive if their full retirement age is 66, their benefit is $1,000, and they chose to claim benefits between age 62 and age 70.
Data source: Author's calculations.
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While this example shows how benefits change depending on when you claim, the exact amount you'll receive in benefits is determined by a complex calculation based on your highest 35 years of earnings.
You can create a login here to view your actual Social Security benefit, but the average monthly Social Security check is $1,404 in 2018, and the average check paid to recipients age 62, age 66, or age 70 last year was $1,112.30, $1,382.78, and $1,510.49, respectively.
Once you know your expected Social Security income at age 62, age 66, and age 70 add to it any other sources of retirement income you'll receive, such as pensions and investment income. If you've thoroughly calculated your projected retirement expenses, then you should be able to use these numbers to determine the age at which you can reasonably expect to afford to retire. Important considerations
If you have ample income in retirement from other sources, it might make the most sense to embrace a claim-early and-invest strategy. As you can see in the following chart, waiting to claim benefits doesn't break even with taking benefits early until you reach your late 70s or early 80s, depending on when you claim. But if you claim benefits early and then invest that income, you could conceivably push that breakeven point back even further, depending on your annual returns.
Data source: Author's calculations.
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It's also important to consider the impact of claiming decisions on your spouse's financial security after your death. If your widow and widower is full retirement age, they can receive 100% of your benefit amount after you pass away, but only up to what you would otherwise be receiving if you were still alive. Therefore, if you claim early and receive a smaller monthly benefit, it may not be enough money for your surviving spouse to maintain his or her lifestyle.
If you're working in a high-paying job (relative to what you earned early on in your career), you might want to delay claiming your benefit anyway. If you've already accumulated a 35-year work history, additional high-earning years will replace lower-earning years in your benefit calculation, thereby giving your full retirement age benefit a boost.
Furthermore, if you plan on working into your early 60s, then you should know that if your income exceeds limits, the IRS will tax some of your Social Security until you reach your full retirement age. In those cases, delaying when you claim so that you lower your income taxes might be a smart choice.
Overall, when to claim your Social Security benefits is one of the most complex, and important, choices you'll face leading up to retirement, so make sure you understand the various retirement strategies available to you.
Yup. I’m a level 8. Lowest of the low apparently. Kind of like being a seaman recruit in boot camp. LOL! Scum of the earth.
Ping.
However, you do not have to enroll in any other Medicare programs.
The only intersection of the SS and Medicare programs is when you turn 65 and Medicare Part A is mandated.
You will also be signed up for Part B but you can decline it to keep them from withdrawing $120 a month from your SS check every month.
I was NOT required to sign up for Medicare & I did NOT do so.
Now 78, and have had only one instance where I could have used it. Cataract surgery. Got a decent CASH price from the doc. Paid Cash.
What if you NEVER try to sign up for Medicare Part B?
How can they penalize you for something you NEVER sign up for?
A widow or widower, at full retirement age or older, generally receives 100 percent of the worker’s basic benefit amount. A widow or widower, age 60 or older, but under full retirement age, receives about 71-99 percent of the worker’s basic benefit amount; or.Apr 22, 2015
Like I said, my co-pays pale in comparison to what medical insurance premiums would cost me every month if I didn't go to the VA.
The VA co-pays look like a real bargain then.
“Depending on who you talk to, experts usually recommend budgeting for 70% to 80% of your pre-retirement income to cover expenses in retirement.”
Here we go with ‘experts’ again. For people planning retirement (and thus making more money than they’re spending), what COUNTS is not what one’s income level is, but rather what one’s EXPENDITURE level is. If you’re making twice what you’re spending, then you’d have to actually INCREASE your retirement spending to get to the 70 to 80% level.
Obviously, the above is possible, particularly if you plan to travel a lot, but I really doubt these ‘experts’ have that in mind. Much more likely is that your travel expenses stay about the same, but you downsize on clothing, housing, and cars...to some extent - so your overall cost of living goes down.
But, as usual, the math is too hard for the leftists who write these articles.
Good news, it is free.
That's if you're still earning income.
I assumed she had none..................
Take it at 62 and invest all of it.
Take the money when you’re younger. What are you gonna do with the extra at age 90? You can host, but you can’t party.
As I was looking at SS options, there was an option that did not make sense. ( Feds since closed this option but grandfathered in those already on it and if you were born before 1954)
My first response was: Are we nuts ?
My second response was: Do I qualify ?
It’s called a “restricted”.
Read about it here. https://www.thebalance.com/social-security-rules-for-restricted-applications-2388915
My wife an I were born before 1954.
We are both about the same age.
She wanted to continue to work. I didn’t.
She robbed the cradle as she is a couple of months older than me.
I had her hold off filing until I filed.
I filed for full retirement benefits.
She filed a restricted application and got half of my monthly benefit.
Her own SS benefit is growing at approx. 8% a year.
When she turns 70.5 she needs to make a decision on how to file on her own benefit.
Until then, she will have banked approx 50k.
If any of all you all qualify, might be worth it to look into this.
It works best if you are close in age and both are at full retirement age.
This is NOT file and suspend. ( That has different rules )
This is a “Restricted” application.
Good luck...
Yup. I have a medicare supplement which costs me zero and of course medicare and then add in the VA and mine isn’t too bad. Mrs. rktman on the other hand because she’s only 55, is not cheap. My employer was gonna up her medical to over a $1,000 per month so we found an outside insurance which is “only” $708/mth. Yikes! In fact, I have an appointment on Friday morning 0830 for a stress test and then an echo-cardio afterwards. I wonder how much that would have cost me in the real world. Or, would I just have declined it?
My aunts and uncles all died aged 70 to 77, except for the ones who died of other causes.
So I figure I will as well.............
that should be...when she turns 70 ( not 70.5)
Your wife, upon your death, will draw what you would have drawn at full retirement age, not what you would draw at age 70. SS stops increasing the survivor benefit after what it would be at your full retirement age, even though your payment did increase up to age 70.
For example if your full benefit at full retirement (e.g., 66) is $2500, but by deferring to age 70 it rises to $3300, she would only get the $2500 not the $3300 upon your death.
Also, if your wife claims her spousal or regular benefit before her full retirement age that percentage reduction is also applied to her survivor benefit.
Since I was born in ‘55 and my wife is 7 years younger, it doesn’t apply to us....................
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