In 2020, the average Social Security retirement benefit was around $1,514 a month. Although this may not seem like a lot, it can be a good addition to your retirement plan.
If you don’t know much about Social Security solutions, this guide is for you! Read on to find out when you should apply and more.
Social Security Solutions Basics
Social security solutions, also known as retirement benefits, take a bit of time to figure out. You’ll need to apply and gather the necessary documents.
You can begin these benefits anywhere between the ages of 62 and 70. The first step to applying involves knowing if you are eligible.
As you work and pay Social Security taxes, you are earning credits that lead to benefits later in life. Those born after 1929 usually need 40 credits to become eligible.
If you stop working before having the right amount of credits, you can return to work later. The credits will always stay on your Social Security record.
How Retirement Benefits Work
A Social Security solution replaces some of the pre-retirement income depending on the amount of lifetime earnings you have. The part of your wages that Social Security benefits replace depends on your earnings and when you choose to receive benefits.
The money you pay to taxes is not held in a personal account for use when you decide to receive benefits. Instead, the tax money pays benefits to disabled people, other retired people, and dependents of beneficiaries.
Basically, your taxes are being used to pay people who currently need the benefits. This means when you begin receiving your benefits, someone else’s Social Security taxes are getting used.
You can maximize your Social Security benefits when you plan ahead of time for retirement. In general, you’ll need more than Social Security benefits to create a retirement plan.
The decision of when to receive your benefits is a personal one. Keep in mind that the age you choose to receive benefits will affect how much you get back in monthly payments.
To help you further understand Social Security solutions, speak to a lawyer that specializes in Social Security law.
Below, you can learn more about the difference in retirement ages, and look at this chart for additional help.
Full Retirement Age
You can receive the full retirement amount at age 66 if you were born from 1943 to 1954. From there on, the age gradually increases. Those born in 1960 or later have a full retirement age of 67.
Early Retirement Age
You can start receiving benefits at age 62, but you won’t receive the full benefit amount. We suggest only seeking benefits early for emergency funds.
Delayed Retirement Age
If you delay your benefits, they can increase up until you turn 70. There is no incentive for claiming benefits when you are older than 70.
Applying for Retirement Benefits
There is no right answer on when to apply for Social Security solutions as everyone’s situation is different. However, you can apply for benefits as early as age 62.
What we can tell you is that if you receive benefits before your full retirement age, your monthly payment amount will decrease. In contrast, if you delay payments, your benefits will increase.
To read more on topics like this, check out the Lifestyle category