When do I apply for Social Security benefits?
May 23, 2022 7:41 AM Subscribe
I just turned 65. I've enrolled in Medicare.
I don't know when to apply for Social Security benefits.
I've talked to my Medicare insurance broker, AARP, read - tried to read - information on the Social Security site. I'm still not sure how it works.
If I read it correctly, I wait until I'm 66 years and 6 months, I get the full benefit, regardless of how much I continue to earn. Is that correct?
Then I read elsewhere that I can apply now, have the benefit reduced by an amount based on my current income. Then, when I turn 66/6, I get the full benefit.
I'm confused.
Can anyone please clarify this for me?
Thank you!
I've talked to my Medicare insurance broker, AARP, read - tried to read - information on the Social Security site. I'm still not sure how it works.
If I read it correctly, I wait until I'm 66 years and 6 months, I get the full benefit, regardless of how much I continue to earn. Is that correct?
Then I read elsewhere that I can apply now, have the benefit reduced by an amount based on my current income. Then, when I turn 66/6, I get the full benefit.
I'm confused.
Can anyone please clarify this for me?
Thank you!
Best answer: This seems like a pretty good 2-page explanation from SSA. The short version is that, yes, once you reach the full retirement age for your birth year, you get the full SS benefit regardless of whether you are earning income. If you start taking SS benefits before your full retirement date, they reduce your SS benefits in proportion to your income, but only until you hit the full retirement age - and you get some kind of benefit that makes up for the earlier reduction, which I have not studied but is referenced in the linked document. Finally, you can delay when you start receiving benefits throughout your 60s and you will receive a larger monthly benefit when you eventually start taking the benefit.
posted by Mid at 8:19 AM on May 23, 2022
posted by Mid at 8:19 AM on May 23, 2022
Best answer: I'll add that my mother was a long time claims rep for the SSA and a big part of what she did was answer questions like yours. It was expected and very typical and she and her colleagues enjoyed it. It was very commonplace for my mother to be answering question at every family or social gathering. I understand that nowadays this question answering is more centralized but there are people and resources that will answer your questions.
posted by mmascolino at 8:26 AM on May 23, 2022 [1 favorite]
posted by mmascolino at 8:26 AM on May 23, 2022 [1 favorite]
Best answer: First, an important general concept: Social Security is life insurance, in that it pays you money as long as you are alive. (What we call life insurance is really death insurance, which pays only when you die.)
The later you claim, up to age 70, the higher your monthly benefit. (Technically, your "full benefit" is what you get at your "full (or normal) retirement age," which you say is 66 and 6 months, but varies by birth year, reaching 67 for those born in 1960 or later. Then you get an "actuarial reduction" for early claim or a "delayed retirement credit" for later claim, up to age 70.)
Generally, it's a good idea to wait as long as you can because it increases the amount of life insurance you get. (If you really need the money, or if you are ill and don't expect to live long, it may not be a good idea to wait.)
Separately, there's something called the retirement earnings test. If you earn above a specified amount and are below the full retirement age, your benefit is reduced. But as you note, that reduction is offset by an increase in your benefit after the full retirement age. And the retirement earnings test does not apply after the full retirement age. But the simplest and generally best thing is just not to claim until at least the full retirement age, and even later if you can swing it.
posted by Mr.Know-it-some at 8:27 AM on May 23, 2022 [1 favorite]
The later you claim, up to age 70, the higher your monthly benefit. (Technically, your "full benefit" is what you get at your "full (or normal) retirement age," which you say is 66 and 6 months, but varies by birth year, reaching 67 for those born in 1960 or later. Then you get an "actuarial reduction" for early claim or a "delayed retirement credit" for later claim, up to age 70.)
Generally, it's a good idea to wait as long as you can because it increases the amount of life insurance you get. (If you really need the money, or if you are ill and don't expect to live long, it may not be a good idea to wait.)
Separately, there's something called the retirement earnings test. If you earn above a specified amount and are below the full retirement age, your benefit is reduced. But as you note, that reduction is offset by an increase in your benefit after the full retirement age. And the retirement earnings test does not apply after the full retirement age. But the simplest and generally best thing is just not to claim until at least the full retirement age, and even later if you can swing it.
posted by Mr.Know-it-some at 8:27 AM on May 23, 2022 [1 favorite]
Best answer: This explainer (link to pdf from SSA) might be what you're looking for. It says full benefits start at 67 and you get an additional benefit if you wait till age 70 to claim. Here's an example from the document:
To head off confusion, if the OP just turned 65 (I assume at some point in this calendar year), then they were born in 1957 -- for individuals born in 1957 the full retirement age is 66 years and 6 months, not 67 years as it is for those born in 1960 and later.
posted by andrewesque at 8:29 AM on May 23, 2022 [3 favorites]
To head off confusion, if the OP just turned 65 (I assume at some point in this calendar year), then they were born in 1957 -- for individuals born in 1957 the full retirement age is 66 years and 6 months, not 67 years as it is for those born in 1960 and later.
posted by andrewesque at 8:29 AM on May 23, 2022 [3 favorites]
Best answer: You can set up an online account with Social Security which can tell you precisely what your benefits would be in various scenarios of when you claim them. It's a pretty straightforward website and easy to navigate, plus you'll probably want online access when you start receiving benefits. IIRC you can even apply for your Social Security benefits through the website.
posted by DrGail at 8:32 AM on May 23, 2022 [4 favorites]
posted by DrGail at 8:32 AM on May 23, 2022 [4 favorites]
Best answer: One thing to think about is that when you delay you get more per month for the rest of your life, but you're also missing out on whatever you would have gotten during that delay. So if you delay for a year to get a higher monthly payment later, that's a whole year when you're not getting anything. I would love to see a chart showing how long you have to live getting larger checks to make up for that year you didn't get. Maybe you get more overall if you live until 90, but what if you only live until 75?
Basically, I'm not 100% convinced that delaying until full retirement is the financial slam dunk it's presented as. (Neither of my parents lived long enough to retire, so I'm sure that colors my view.)
posted by FencingGal at 8:42 AM on May 23, 2022 [3 favorites]
Basically, I'm not 100% convinced that delaying until full retirement is the financial slam dunk it's presented as. (Neither of my parents lived long enough to retire, so I'm sure that colors my view.)
posted by FencingGal at 8:42 AM on May 23, 2022 [3 favorites]
Best answer: The benefit amounts are calculated to come out equal based on the life expectancy tables, so if you expect to live longer, then you come out ahead by delaying your benefit, and vice versa.
posted by doctord at 8:49 AM on May 23, 2022 [2 favorites]
posted by doctord at 8:49 AM on May 23, 2022 [2 favorites]
Best answer: The Social Security Administration designs Social Security "reduction factors" based on your age claiming Social Security to be "actuarially neutral". That is, all things being equal, it doesn't matter to the SSA when you claim Social Security because the average person will receive the same amount of money whether they claim early or at full retirement age. As alluded by FencingGal, people claiming early will get a period of payments that people claiming at full retirement age won't get.
There is some research indicating that the SSA's adjustments aren't perfectly accurate, and that claiming at full retirement age results in a slight increase in overall benefits. However, in all the research I've indicated, the increase is slight.
I think the question is really for you. Can you wait until full retirement age to claim? If you can't, then it doesn't matter. Correspondingly, if you have well-sufficient income to sustain yourself, there's generally a tax benefit to claiming later. Folks that have enough that much income tend to end up being taxed on Social Security benefits, and then they'll be taxed on money they don't actually need to receive.
Similarly, do you have reason to expect that you are not an average person, and hence, expect to either live shorter than an average person or longer than an average person? If so, that should influence your decision.
I don't think there's an overall rule of thumb - and if there is one, you should question it.
posted by saeculorum at 8:51 AM on May 23, 2022 [2 favorites]
There is some research indicating that the SSA's adjustments aren't perfectly accurate, and that claiming at full retirement age results in a slight increase in overall benefits. However, in all the research I've indicated, the increase is slight.
I think the question is really for you. Can you wait until full retirement age to claim? If you can't, then it doesn't matter. Correspondingly, if you have well-sufficient income to sustain yourself, there's generally a tax benefit to claiming later. Folks that have enough that much income tend to end up being taxed on Social Security benefits, and then they'll be taxed on money they don't actually need to receive.
Similarly, do you have reason to expect that you are not an average person, and hence, expect to either live shorter than an average person or longer than an average person? If so, that should influence your decision.
I don't think there's an overall rule of thumb - and if there is one, you should question it.
posted by saeculorum at 8:51 AM on May 23, 2022 [2 favorites]
Best answer: Some analyses focus on that "break even point," but the point is not to maximize the amount of money you get, but to meet your financial needs by matching your benefits to your needs. If you end up dying early, you (on average) will have a lower need for money, so it doesn't really matter than you waited to claim late and "lost" some money. But if you live to 100, you are going to have to pay for many years of extra expenses, so you'll be glad that you waited until 70. (Again, waiting to claim is a general principle, not a hard and fast rule.)
posted by Mr.Know-it-some at 9:11 AM on May 23, 2022 [2 favorites]
posted by Mr.Know-it-some at 9:11 AM on May 23, 2022 [2 favorites]
Best answer: I would love to see a chart showing how long you have to live getting larger checks to make up for that year you didn't get.
It is based on life expectancy (so changes by your age) and divided into Male and Female, I believe. As others have said, if you outlive your expectancy, you come out ahead.
posted by soelo at 12:32 PM on May 23, 2022
It is based on life expectancy (so changes by your age) and divided into Male and Female, I believe. As others have said, if you outlive your expectancy, you come out ahead.
posted by soelo at 12:32 PM on May 23, 2022
Best answer: www.ssa.gov/benefits/retirement
If I read it correctly, if I wait until I'm 66 years and 6 months, I get the full benefit, regardless of how much I continue to earn. Is that correct?
YES
Then I read elsewhere that I can apply now, have the benefit reduced by an amount based on my current income. Then, when I turn 66/6, I get the full benefit.
NOPE, YOU WON'T EVER GET THE FULL BENEFIT IF YOU APPLY FOR BENEFITS BEFORE YOUR FULL RETIREMENT AGE. "If you make the decision to stop working and start receiving retirement benefits before your full retirement age, your benefits are reduced a fraction of a percent for each month before your full retirement age. Also, your benefits will not increase because of additional earnings." In other words, if you start receiving benefits before your full retirement age, your monthly benefit payment will be less then it would be if you were to wait until your full retirement age, AND IT WILL STAY AT THAT AMOUNT AND WILL NOT EVER INCREASE (except for cost of living increases: "Each year, Social Security bases the COLA on changes in the Consumer Price Index. For 2022, Social Security benefits and Supplemental Security Income [SSI payments will increase by 5.9%.") And when it comes to calculating your monthly benefit, they won't calculate in anything you earn between when you filed for benefits early and when you actually retire, so that's another ding.
IF YOU START TO RECEIVE BENEFITS BEFORE FULL RETIREMENT AGE, BUT CONTINUE TO WORK, THEY WILL WITHHOLD SOME OF YOUR BENEFITS, BUT THEY WILL PAY (NOT SURE IF JUST SOME OF IT OR ALL OF) IT BACK AFTER YOU REACH FULL RETIREMENT AGE. "You can get Social Security retirement benefits and work at the same time before your full retirement age. However your benefits will be reduced if you earn more than the yearly earnings limits. After you reach your full retirement age, we will recalculate your benefit amount to give you credit for any months you did not receive a benefit because of your earnings."
ONCE YOU REACH FULL RETIREMENT AGE, YOU CAN EARN AS MUCH AS YOU WANT, AND IT WON'T AFFECT YOUR BENEFITS AT ALL.
BOTTOM LINE IS:
If you decide to receive monthly benefits before your full retirement age, your monthly benefit amount will never be as high as it would be if you had waited until your full retirement age to start receiving benefits. If you decide to apply for benefits before your full retirement age but continue to work, they will withhold some money from your monthly benefit but will pay some of it (or all of it??) back once you reach your full retirement age. Once you reach full retirement age, you can earn as much money as you want and it won't affect your monthly benefit amount (you will, however be subject to paying income tax if you continue to work and earn over a certain amount). If you wait until your full retirement age, your monthly benefit will be higher. If you decide to not wait until your full retirement age, your monthly benefit will permanently be lower than if you had waited.
posted by SageTrail at 12:35 PM on May 23, 2022 [1 favorite]
If I read it correctly, if I wait until I'm 66 years and 6 months, I get the full benefit, regardless of how much I continue to earn. Is that correct?
YES
Then I read elsewhere that I can apply now, have the benefit reduced by an amount based on my current income. Then, when I turn 66/6, I get the full benefit.
NOPE, YOU WON'T EVER GET THE FULL BENEFIT IF YOU APPLY FOR BENEFITS BEFORE YOUR FULL RETIREMENT AGE. "If you make the decision to stop working and start receiving retirement benefits before your full retirement age, your benefits are reduced a fraction of a percent for each month before your full retirement age. Also, your benefits will not increase because of additional earnings." In other words, if you start receiving benefits before your full retirement age, your monthly benefit payment will be less then it would be if you were to wait until your full retirement age, AND IT WILL STAY AT THAT AMOUNT AND WILL NOT EVER INCREASE (except for cost of living increases: "Each year, Social Security bases the COLA on changes in the Consumer Price Index. For 2022, Social Security benefits and Supplemental Security Income [SSI payments will increase by 5.9%.") And when it comes to calculating your monthly benefit, they won't calculate in anything you earn between when you filed for benefits early and when you actually retire, so that's another ding.
IF YOU START TO RECEIVE BENEFITS BEFORE FULL RETIREMENT AGE, BUT CONTINUE TO WORK, THEY WILL WITHHOLD SOME OF YOUR BENEFITS, BUT THEY WILL PAY (NOT SURE IF JUST SOME OF IT OR ALL OF) IT BACK AFTER YOU REACH FULL RETIREMENT AGE. "You can get Social Security retirement benefits and work at the same time before your full retirement age. However your benefits will be reduced if you earn more than the yearly earnings limits. After you reach your full retirement age, we will recalculate your benefit amount to give you credit for any months you did not receive a benefit because of your earnings."
ONCE YOU REACH FULL RETIREMENT AGE, YOU CAN EARN AS MUCH AS YOU WANT, AND IT WON'T AFFECT YOUR BENEFITS AT ALL.
BOTTOM LINE IS:
If you decide to receive monthly benefits before your full retirement age, your monthly benefit amount will never be as high as it would be if you had waited until your full retirement age to start receiving benefits. If you decide to apply for benefits before your full retirement age but continue to work, they will withhold some money from your monthly benefit but will pay some of it (or all of it??) back once you reach your full retirement age. Once you reach full retirement age, you can earn as much money as you want and it won't affect your monthly benefit amount (you will, however be subject to paying income tax if you continue to work and earn over a certain amount). If you wait until your full retirement age, your monthly benefit will be higher. If you decide to not wait until your full retirement age, your monthly benefit will permanently be lower than if you had waited.
posted by SageTrail at 12:35 PM on May 23, 2022 [1 favorite]
Clarification re my statement: "If you decide to receive monthly benefits before your full retirement age, your monthly benefit amount will never be as high as it would be if you had waited until your full retirement age to start receiving benefits."
This includes even if you continue to work after you start receiving monthly benefits before your full retirement age.
posted by SageTrail at 1:01 PM on May 23, 2022 [1 favorite]
This includes even if you continue to work after you start receiving monthly benefits before your full retirement age.
posted by SageTrail at 1:01 PM on May 23, 2022 [1 favorite]
Best answer: You don’t mention whether you’re divorced or widowed. In those cases, you can receive half of your divorced spouse’s or all of your deceased spouse’s benefit now (if it’s higher than your own), and postpone filing for your own benefit until age 70 1/2.
posted by elphaba at 1:30 PM on May 23, 2022
posted by elphaba at 1:30 PM on May 23, 2022
Best answer: A lot depends on your financial circumstances, and your general health. I used to think that I would have to wait till age 70— the benefit is much higher! But as it happens I have a low income and feel trapped in my living arrangements. So it probably makes sense for me to take Social Security far earlier.
posted by zompist at 5:10 PM on May 23, 2022
posted by zompist at 5:10 PM on May 23, 2022
Best answer: I don't work for Social Security, and I am not a financial advisor. I am just at the age where the number of zeros factored into my total SSI benefit years is of concern.
The problem is settling for a fraction of what you qualify for per month. That is permanent. That effects other streams of SSI benefits.
Double check the alternative streams of Social Security income for which you may qualify. My understanding is that the percentage of the amount per month is capped permanently when you apply for any of your qualifying benefits.
Once upon a time wives applied for one SSI benefit in their early 60s, then switched to the higher benefit once they reached their full retirement age. This option is either going away or gone.
Confirm this but: If you apply for one benefit, all streams of potential income are capped at the initial percentage, regardless of when you apply for them (your own SSI benefits, your current spouse's benefits once they begin receiving them, your widow or widower's benefits, benefits from a living or deceased ex-spouse if applicable, etc).
You can only control your own SSI benefits. Did you earn your 40 points to qualify? How much did you earn per year over the years averaged together? When do you apply for benefits once you qualify?
Don't settle for 50 percent of what you earned when you can wait a couple of years and double the monthly check.
posted by TrishaU at 7:10 PM on May 23, 2022
The problem is settling for a fraction of what you qualify for per month. That is permanent. That effects other streams of SSI benefits.
Double check the alternative streams of Social Security income for which you may qualify. My understanding is that the percentage of the amount per month is capped permanently when you apply for any of your qualifying benefits.
Once upon a time wives applied for one SSI benefit in their early 60s, then switched to the higher benefit once they reached their full retirement age. This option is either going away or gone.
Confirm this but: If you apply for one benefit, all streams of potential income are capped at the initial percentage, regardless of when you apply for them (your own SSI benefits, your current spouse's benefits once they begin receiving them, your widow or widower's benefits, benefits from a living or deceased ex-spouse if applicable, etc).
You can only control your own SSI benefits. Did you earn your 40 points to qualify? How much did you earn per year over the years averaged together? When do you apply for benefits once you qualify?
Don't settle for 50 percent of what you earned when you can wait a couple of years and double the monthly check.
posted by TrishaU at 7:10 PM on May 23, 2022
Best answer: Please note that there are 3 types of social security:
SS - retirement benefits based on work credits and your income during the years you worked.
SSI - determination is based on age/disability and limited income and resources.
SSDI - determination is based on disability and work credits.
posted by SageTrail at 7:57 PM on May 23, 2022
SS - retirement benefits based on work credits and your income during the years you worked.
SSI - determination is based on age/disability and limited income and resources.
SSDI - determination is based on disability and work credits.
posted by SageTrail at 7:57 PM on May 23, 2022
Best answer: If you're still working you're going to pay taxes on your SS - on the amount you receive from them- unless your salary is extremely low. Here's a calculator from SS which will tell you how much you will get if you retire at various ages.
If you're making a decent salary and plan to keep working there is nothing you need to do. When you do decide to retire go to the SS website.
If it's still confusing feel free to mefi mail me, I've been through the process, and when I worked as a librarian I helped others through the process.
posted by mareli at 4:56 AM on May 24, 2022 [1 favorite]
If you're making a decent salary and plan to keep working there is nothing you need to do. When you do decide to retire go to the SS website.
If it's still confusing feel free to mefi mail me, I've been through the process, and when I worked as a librarian I helped others through the process.
posted by mareli at 4:56 AM on May 24, 2022 [1 favorite]
Best answer: NOPE, YOU WON'T EVER GET THE FULL BENEFIT IF YOU APPLY FOR BENEFITS BEFORE YOUR FULL RETIREMENT AGE.
This is not quite correct. It is true that if you receive benefits before the full retirement age, your benefits will be permanently reduced.
But the original question also included this: "Then I read elsewhere that I can apply now, have the benefit reduced by an amount based on my current income. Then, when I turn 66/6, I get the full benefit."
That is referring to the retirement earnings test. "Under the Social Security Retirement Earnings Test (RET), the monthly benefits of most Social Security beneficiaries who are below full retirement age (FRA) ... are reduced if they have earnings that exceed an annual threshold. If a beneficiary is affected by the RET, his or her monthly benefit is recomputed, and the dollar amount of the monthly benefit is increased, when he or she attains FRA."
Some people worry about money they would lose from working and being subject to the RET. But they don't lose the money, because they would get it back after reaching the normal retirement age.
In theory, if you apply before NRA and have high income, then your entire benefit could be withheld, and then you would get your full benefit when you reach the normal retirement age. But in that case, it's just as if you didn't claim benefits.
posted by Mr.Know-it-some at 10:44 AM on May 24, 2022
This is not quite correct. It is true that if you receive benefits before the full retirement age, your benefits will be permanently reduced.
But the original question also included this: "Then I read elsewhere that I can apply now, have the benefit reduced by an amount based on my current income. Then, when I turn 66/6, I get the full benefit."
That is referring to the retirement earnings test. "Under the Social Security Retirement Earnings Test (RET), the monthly benefits of most Social Security beneficiaries who are below full retirement age (FRA) ... are reduced if they have earnings that exceed an annual threshold. If a beneficiary is affected by the RET, his or her monthly benefit is recomputed, and the dollar amount of the monthly benefit is increased, when he or she attains FRA."
Some people worry about money they would lose from working and being subject to the RET. But they don't lose the money, because they would get it back after reaching the normal retirement age.
In theory, if you apply before NRA and have high income, then your entire benefit could be withheld, and then you would get your full benefit when you reach the normal retirement age. But in that case, it's just as if you didn't claim benefits.
posted by Mr.Know-it-some at 10:44 AM on May 24, 2022
Response by poster: Thanks everyone for the responses!
Now I can at least ask myself the proper questions!
posted by holdenjordahl at 6:46 AM on May 25, 2022
Now I can at least ask myself the proper questions!
posted by holdenjordahl at 6:46 AM on May 25, 2022
Some people worry about money they would lose from working and being subject to the RET. But they don't lose the money, because they would get it back after reaching the normal retirement age.
The above statement is true, but I maintain that you will never get the full benefit if you apply for benefits before your full retirement age.
The following are two separate things:
1) RET due to applying for social security before full retirement age but continuing to work.
2) Applying for retirement early.
Here is an illustration (the figures are made up ones just for the purpose of illustration):
Start receiving benefits at age 62.
Benefit amount is $1000 per month and will stay that way permanently whether or not you continue to work.
If you do continue to work, they will reduce your $1000 per month by $200 per month while you are working, so your monthly social security payment will be $800.
If you work for a year, for example, and then quit working, they will have withheld $2400. When you reach full retirement age, they will then start paying you $1000 per month, plus they will give you back the $2400 (or at least some of it ... not sure how much they give back ... I'm also not sure how quickly they give it back. It could be that upon full retirement age your monthly checks would be $1200 for a year to pay back the $2400 and then would go back down to the permanent $1000 per month.)
However, if you wait and start receiving benefits at full retirement age of 66 and 6 months:
Benefit amount is $1500 per month. At full retirement age you can work as much as you want and your benefit will continue to be $1500 per month - nothing will be withheld.
posted by SageTrail at 8:18 PM on May 30, 2022
The above statement is true, but I maintain that you will never get the full benefit if you apply for benefits before your full retirement age.
The following are two separate things:
1) RET due to applying for social security before full retirement age but continuing to work.
2) Applying for retirement early.
Here is an illustration (the figures are made up ones just for the purpose of illustration):
Start receiving benefits at age 62.
Benefit amount is $1000 per month and will stay that way permanently whether or not you continue to work.
If you do continue to work, they will reduce your $1000 per month by $200 per month while you are working, so your monthly social security payment will be $800.
If you work for a year, for example, and then quit working, they will have withheld $2400. When you reach full retirement age, they will then start paying you $1000 per month, plus they will give you back the $2400 (or at least some of it ... not sure how much they give back ... I'm also not sure how quickly they give it back. It could be that upon full retirement age your monthly checks would be $1200 for a year to pay back the $2400 and then would go back down to the permanent $1000 per month.)
However, if you wait and start receiving benefits at full retirement age of 66 and 6 months:
Benefit amount is $1500 per month. At full retirement age you can work as much as you want and your benefit will continue to be $1500 per month - nothing will be withheld.
posted by SageTrail at 8:18 PM on May 30, 2022
p.s. At full retirement age of 66 and 6 months, benefit is $1500 rather than only $1000 because you waited until full retirement.
posted by SageTrail at 5:58 AM on May 31, 2022
posted by SageTrail at 5:58 AM on May 31, 2022
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posted by MiraK at 8:19 AM on May 23, 2022 [2 favorites]