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Social Security Benefits Review | Starting Retirement Benefits


Social Security History:

The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system. The two Social Security trust funds, those for Old-Age and Survivors Insurance (OASI) benefits and for Disability Insurance (DI) benefits, are special.  Along with the Hospital Insurance (HI) Trust Fund of the Medicare program, the OASI and DI Trust Funds have the important feature that benefits can only be paid to the extent that the trust funds actually have assets to draw on to pay the benefits.did you know

Unlike the rest of federal government operations, these three trust fund programs do not have the ability to borrow in order to continue paying benefits when the dedicated taxes and trust fund reserves are not sufficient. When there is a “net surplus,” this gets put into the trust fund. This surplus is invested in special issue government bonds.

 In this review I will go over the following topics:

  • IF you are about to apply for benefits:
    o   How much income will you need?
    o   What to do before you apply.
    o   How and who can apply?
    o   What about Medicare?

 

How Much Income will you need?

This screenshot was taken directly from the Social Security Website:

Social Security How much money will you need?

http://www.ssa.gov/planners/benefitcalculators.htm

The one thing that the US government wants people to understand is that Social Security Benefits are a foundation for an overall retirement plan.  Benefits should be considered as a piece of the overall retirement umbrella.  Please visit our retirement section which goes over some more pieces of the retirement umbrella.

What to do before you apply?

Some basics of understanding Social Security is knowing the right retirement age to receive your full retirement benefits.  This depends upon when you were born and could affect the amount of your benefits entitled to you or when you could start to receive them.

You may start as early as age 62, or as late as 70, but keep in mind that your benefits reduce if you start them before your full retirement age.

Retirement Table

http://www.socialsecurity.gov/retire2/retirechart.htm

The reduction for early benefits at age 62 is reduced by about 30%:

  • 63 is about 25%
  • 64 is about 20%
  • 65 is about 13.3%
  • 66 is about 6.7%

 

 

 

 

 

 

 

 

You may also want to understand what delaying your retirement can do for you such as increasing Retirement Credits when you retire beyond your full retirement age.

Delayed Retirement

http://www.socialsecurity.gov/retire2/delayret.htm

Life Expectancy is another important factor to consider.  If you are someone who will live to the average life expectancy for a person of your gender, you will generally receive about the same amount in benefits if you should choose to start receiving them at 62 or later at 70.

Other factors to consider, would be how long do you think you will receive the benefits, your health, and if anyone else in your family can get benefits on your record?

Who and How to apply?

You can apply for your, or your benefits as a spouse if you are:

  • at least 61 years and 9 months old;
  • are not currently receiving benefits on your own Social Security record;
  • Have not already applied for retirement benefits; and
  • want your benefits to start no more than 4 months in the future.  So if you want it to start later, you would need to wait longer in order to do so.

Applying is as simple as going online by clicking here.  You can simply fill out the application online if you want to, and the entire process takes about 15-20 miniutes to complete.

Applying online is great because it avoids trips to your Socical Security office which can save you time and money.  You have the ease and flexibility of your schedule and you don’t have to mail anything in, it is all done through the website for you.  You can also check the status of your application through the website if you wanted to as well.

The Social Security Administration will contact you once the application has been reviewed.  If there are any questions that they need clarification from you on, they will contact you as at that point as well.

If you would like to apply by phone you can (1-800-772-1213), or you can visit your local Social Security Office by clicking here, although you should still call and make an appointment first.

What about Medicare?

If you have medicare you can still use the standard application to apply for retirement benefits, and if you don’t but are within 3 months of age 65, you can still use the application for both retirement and Medicare, or just Medicare by itself if you are not ready to receive retirement benefits yet.

Conclusion:

Social Security Benefits should be taken with careful consideration of an overall retirement plan.  There are many factors to consider and we will try to continue to educate you through a series of blogs dedicated to specific Social Security Benefit and other information.  You should seek out the help of a financial professional so that you can see how these benefits fits into your specialized plan, and chart a course of action for yourself, spouse or any other love ones you may have in your life.

Reference guide: http://www.socialsecurity.gov/

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