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As anxious as you may be to reach the day when you can
finally toss your alarm clock out the window
and start enjoying retirement, it's important
to make sure that your timing is right. If you’re
planning on receiving at least part of your
retirement income from Social Security, there
are some important things you’ll want to know
that can directly affect the benefits you’ll
receive.
Collecting
Social Security Benefits Early
If you’ve earned enough credits to do so,
you can start collecting Social Security benefits
as early as age 62. The number of credits you
need is determined by the year you were born.
If you were born in 1929 or later, you need
40 credits (or about 10 years of work). If you
were born before 1929, you need fewer credits.
Starting early may sound great, but there’s
a catch: If you take early retirement, your
benefits will be permanently reduced based on
the number of months you will receive checks
before you reach full retirement age. If your
full retirement age is 65, the reduction for
starting your Social Security at age 62 is about
20 percent; at age 63, it is about 13 and 1/3
percent; and at age 64, it is about six and
2/3 percent.
If your full retirement age is older than
65 (that is, you were born after 1937), you
still will be able to take your benefits at
age 62, but the reduction in your benefit amount
will be greater than it is for people retiring
now.
Of course, every person's situation is different
and you'll want to consider your family's longevity
history along with other factors about your
finances when making your benefit timing decision.
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Waiting
Until "Full" Retirement Age
If you start taking benefits at the full
retirement age, then you have a better chance
of qualifying for the full Social Security benefit.
However, your actual benefit will be determined
by your number of years worked and your earnings.
Congress decreed age 65 as the "full retirement
age" for people born before 1938. However,
in order to help shore up Social Security, Congress
decided in 1983 that this age will gradually
increase from age 65 and two months, for those
born in 1938, to age 67, for those born in 1960
or later (see chart below).
|
Year
of Birth
|
Full
Retirement Age
|
|
1937 or earlier
|
65
|
|
1938
|
65 and 2 months
|
|
1939
|
65 and 4 months
|
|
1940
|
65 and 6 months
|
|
1941
|
65 and 8 months
|
|
1942
|
65 and 10 months
|
|
1943-1954
|
66
|
|
1955
|
66 and 2 months
|
|
1956
|
66 and 4 months
|
|
1957
|
66 and 6 months
|
|
1958
|
66 and 8 months
|
|
1959
|
66 and 10 months
|
|
1960 and later
|
67
|
Source: Social Security Administration
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Good
News for Those Who Like to Work
If you’re just crazy about your job and want
to keep on working, the government rewards you
by giving you an extra benefit. Your Social
Security benefits would increase by a certain
percentage for each month past your full retirement
age that you continue to delay retirement (taking
Social Security). These increases are added
automatically from the time you reach full retirement
age until the time you start taking benefits,
with a maximum of age 70. The percentage of
annual increase depends on the year you were
born. If you were born in 1936, for example,
you’ll get an extra 6% added for each year that
you delay retirement. (see chart below)
Increases For Delayed Retirement
| Year of Birth
|
Yearly Rate of Increase
|
| Prior to 1917 |
1% |
| 1917-1924 |
3% |
| 1925-1926 |
3.5% |
| 1927-1928 |
4% |
| 1929-1930 |
4.5% |
| 1931-1932 |
5% |
| 1933-1934 |
5.5% |
| 1935-1936 |
6%
|
| 1937-1938 |
6.5% |
| 1939-1940 |
7% |
| 1941-1942 |
7.5% |
| 1943 or later |
8% |
Source: Social Security Administration
For the full breakdown, call the Social Security
Administration’s toll-free number: 1-800-772-1213.
You can speak to a service representative, set
up an appointment, and/or receive a free booklet
entitled "Retirement Benefits" (Publication
#05—10035). You can also get the booklet plus
answers to other questions online at www.ssa.gov.
Your
Social Security Statement
The Social Security Administration now sends
a benefit estimate statement to all workers
age 25 and older. You should receive your statement
each year about three months before your birth
month. Be sure to review your statement for
accuracy each time you receive it. If you find
discrepancies, report them to the Social Security
Administration by calling 1-800-772-1213.
Article Source: American Express
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