Making the application for social security retirement benefits is straightforward and easy; it is however another kettle of fish altogether to accurately determine when to apply for social security. It is quite difficult to be certain that your timing is right.
Even when you are sure your timing is right, you still need to gather all the documentation that will make you eligible for social security benefits. Many people on the verge of taking their social security retirement benefits have so many questions that they need answers to before making their next moves; all these questions have one common theme: what should be done to make the most of these benefits. It is only appropriate that one understands what social security retirement benefits entail in this regard. This article will help answer some of your social security questions. Read on:
1Social Security Eligibility and Requirements
To become eligible for these benefits you need to be at least 62 years of age and you need to have accumulated an adequate amount of social security credits. These credits are earned through working and via the payment of social security taxes. Persons born in or after 1929 can only qualify for these benefits after earning 40 credits, equivalent to ten years of work. These 40 credits are what you need to qualify for social security retirement benefits regardless of your age. Credits are earned as long as you are working; if you stop working you cannot get any more credits until you resume work. You also have to apply for these benefits to be considered for eligibility.
2The Required Documentation for Social Security Retirement Benefits
The following information and documents are required when you are making your application for social security retirement benefits regardless of whether the application is physical or online:
- Your birth certificate or a credible proof of your US citizenship
- Your social security number
- W-2 forms / self-employment tax return, or both, for your last year of work
- Military discharge papers for persons who have served in any branch of the military
- Your bank name, account number, and bank routing number details if you prefer to have the benefits remitted through direct deposit
3How Much Will You Receive for Social Security Retirement Benefits?
What you earned during your years in work is what determines the social security retirement benefit payment you should expect. Put simply, the more you earned, the more you will get upon retirement.
The other factor that affects your payment is the age at which you decide to call it quits. While you can retire at the early age of 62, it is worth knowing that retiring before you attain the full retirement age results in a permanent reduction of your social security retirement benefits. Retirement at 62 will earn you 25% less than what you would have gotten had you waited for your full retirement age.
4What is the Best Age to Retire?
This decision is entirely for you and your family to make but it should also be informed by the fact that social security retirement benefits only replace approximately 40% of your preretirement income. Living on 40% of your current work earnings may be feasible for you but experts are of the opinion that most people will require 70-80% so as to live comfortably in retirement. With this in mind, the full social security retirement benefits for persons born in 1937 or earlier can be drawn at 65 years of age. People born between 1943 and 1954 can earn full benefits by drawing them at age 66. Those born in 1960 or later can enjoy full benefits by drawing them at age 67. A more comprehensive table for this is available at http://usgovinfo.about.com/od/socialsecurity/a/socsecapply.htm. Also of importance is the fact that regardless of the age you are when you start drawing these benefits, the eligibility for Medicare only begins at age 65.
5Issues of Delayed Retirement
Your social security retirement benefits will be automatically increased by a certain percentage based on the year you were born if you decide to retire past your full retirement age. For example, people born in 1943 or later will have an addition of 8% per year to their benefits for every year past their full retirement age that they delay applying for social security.
6Early Retirement Due To Health Problems
People who can no longer work because of poor health should consider signing up for social security disability benefits. What you get as disability benefit is equal to a full unreduced retirement benefit. Persons getting disability benefits will have these changed to social security retirement benefits upon reaching their full retirement age. More information about early retirement is available at http://www.fairmark.com/retirement/socsec/earnings-test.htm.
7Tips to Help You Make the Most of Social Security Benefits
It is prudent to get the advice of a social security retirements benefit expert before making decisions about your benefits as this issue can get quite complicated. Here are some tips that you can then make use of to help you optimize on your retirement benefits:
- Optimize your social security earnings – Given that retirement benefits are based on a person’s top 35 years of earnings, you should as much as possible try to accumulate as many of these years as possible. Your retirement benefit package can receive a great boost if you just work an extra year in a high paying job.
- Put off claiming your social security retirement benefits – If you wait until your full retirement age it is possible to add as much as 30% to your package.
- Part-time work during retirement – People who have attained full retirement age can continue working and in doing so, they’ll make as much as they want to without any reductions to their retirement benefits. Alternatively, it is possible to delay taking your social security retirement benefits by taking up a part-time job.
- Collecting based on a spouse’s earnings – Married people can claim retirement benefits based on personal earnings or half of their spouses’ benefits if these are larger.
- Make use of your ex’s benefits – The above benefit is also applicable to ex-spouses. Persons that were married to ex-spouses for at least ten years and are currently not married to another person can collect up to 50% of their ex-spouses’ benefits. It is not necessary to let the ex-spouse know of this arrangement because their benefits won’t be affected in any way.
