Put away your calculators and W2 earnings statements. This is not a math lesson - thank goodness - because the math behind the calculation of your Social Security retirement benefit can be pretty complicated. That said, if you want to know the general calculations behind your Social Security retirement benefit, read on.
If you were born after 1929, have 40 credits of earnings history (e.g. 10 years’ of work), and are at least 62 years of age, you are eligible to collect Social Security retirement benefits. (Note that I didn't include being a U.S. citizen as being a requirement...because it isn't one.)
You know you're entitled to a retirement benefit from Social Security, but there seem to be a lot of rules regarding when you can actually collect it. To understand some of those rules, let’s assume we’re talking about an individual at Full Retirement Age of 66 with a Primary Insurance Amount of $2,500 per month.
January 3, 2017
Happy New Year! Best wishes for a healthy, happy, and prosperous 2017.
As the year drew to a close, we moved into the prediction silly season. In an often futile attempt to predict and outsmart the markets, print, on-line, and television media were filled with pundits predicting the markets will go up (or down); interest rates will rise (or fall); housing prices will climb (or drop); and on, and on. It’s an inevitable occurrence.
Thus, I think it’s only fitting that I make at least one prediction, a prediction I am confident has a 100% probability of occurrence. Unfortunately, I’m unable to tell you the date when it will occur, as my predictive powers are somewhat limited.
January 3, 2017
I often tell my near 95-year old mother that we’re in charge of our bodies when it comes to doctors, but I’m constantly reminded that I’m dealing with someone from a generation who scrupulously listened to everything a doctor said.
January 3, 2017
As every client, prospect, friend, the Shop-Rite fishmonger, and my spouse can all attest, I think it’s important to discuss what people are going to do in retirement. (I know what they’re not going to do: work...but what are they going to do.) Some tell me they don’t need my help (e.g., my spouse), while others tell me they’re going to continue selling fish for a living (e.g., the fishmonger).
While a Social Security recipient can collect her retirement benefit any time between 62 and 70, that doesn’t mean she has completely unfettered access with no strings attached. In fact, the Social Security earnings limit might prevent someone from collecting their full retirement benefit if they have employment earnings.
The Social Security system is filled with complexity - questions ranging from when should I claim to isn't the Social Security system bankrupt to when can I collect my Social Security retirement benefit are kicked around on a regular basis.
So what if you're divorced? Thankfully, many rules and strategies remain the same regardless of whether you're married or divorced, albeit with a few caveats. The requirements that need to be satisfied in order to collect off of an ex-spouse's record are as follows:
"I just turned 62 and am now eligible to collect my Social Security retirement benefit. Why wouldn't I take the money and run?"
- Overwhelming majority of Americans
Reviewing recent reports on Social Security collections, approximately 90% of people claim at or before Full Retirement Age, and the majority of those folks are collecting at 621. And possibly with good reason. For example, would I ever recommend someone go into credit card debt to purchase groceries all in the name of delaying collection of their Social Security? Of course not! However, if there are other assets you can tap to meet everyday living needs, it's at least worth considering what value you might be leaving on the table by collecting upon eligibility as opposed to waiting a few more years.
I was speaking with everyone's favorite skeptic, Billy Know-It-All, recently (you know, the one who claims that Social Security is bankrupt?), and he was up to his old antics again. We were discussing the optimal time for him to claim Social Security, and inevitably life expectancy comes up.