OfComes to next year you may be even more looking forward to your retirement. However, there are several things to consider before you get started . You have many options when it comes to your benefits, and several of them can affect the amount of money you receive each month, such as when you decide to start collecting your benefits.
We tell you what you need to know about your Social Security benefits before you retire. If you’re nearing retirement, here’s the.
Your Social Security money is based on your income
The amount of money you earn during your career plays an important role in determining how much money you receive from Social Security. If you have worked for a total of 45 years, only the 35 most earned years count towards your benefit. For example: if you earned $35,000 during the first 10 years of your employment history and $55,000 during 35 years, only the income of $55,000 would count (so you receive more money).
Here’s more information about it.
There is a limit on the Social Security money you receive each month
Someone who earns $900,000 a year may not receive more Social Security money per month than someone who earns $200,000 a year. That’s because the Social Security Administration has a limit on how much income can be taxed by the administration. The maximum amount has changed over the years and is likely to continue to do so.
For 2022, the maximum taxable income is $147,000; in 2015 it was $118,500.
If you have more than one job and employers withhold more than the maximum from your paycheck, taxes may exceed the maximum amount. If so, according to the SSA, you can claim a refund from the IRS for the money that went over the maximum amount.
This is how the maximum amount you could receive monthly in 2022 will be divided:
- Collect Social Security at age 62: $2,364
- Collecting Social Security at Full Retirement Age: $3,345
- Collecting Social Security at age 70: $4,194
Waiting years after retirement to collect benefits? Not so fast
If you plan on retiring early — like age 60 — and living on savings and a 401(k) plan, stop there. If you retire before age 62, when you can officially start receiving Social Security benefits, all years not worked will show up as $0 income and will still count towards your total Social Security pay.
Here’s why: The Social Security Administration uses your last 35 years of work history to calculate your monthly benefit amount after you retire. If you stop working and have less than 35 years of employment, or have a lower income over other years worked, your benefit amount will be reduced.
Instead, if you continue working for two years longer, any low-income years will be replaced by high-income years, which can increase your benefits.
You can start collecting benefits before you reach full retirement age
You can’t start collecting your Social Security benefits at age 45 (sorry), but you can collect it before your full retirement age. The earliest age at which you can receive your benefit is 62; full retirement age is 67 for anyone born in 1960 or later.
You must have 40 credits to be eligible for Social Security benefits. Credits are earned when you work and pay Social Security taxes. On average, it takes about 10 years of work to earn 40 credits.
If you choose to receive your benefit earlier, your monthly amount will be reduced by 30% (if you were born in 1960 or later).
You’ll get more money if you wait to cash in your Social Security
You probably know that if you wait until full retirement age to collect your Social Security benefits, you will receive 100% of your benefits. But if you decide to wait until you’re 70 to retire, you’ll get even more money.
Your benefits will be increased by a percentage for each month you defer your benefits after full retirement age until age 70. If you were born in 1960 or later and wait to receive Social Security benefits until age 70, you will receive 124% of your benefit.
You can now view your estimated monthly pension amount online
If you’re interested in seeing your estimated monthly Social Security benefits based on your current work history, you can do it quickly and easily. You’ll have toonline.
Even if it’s 20 years or more before you retire, you can see an estimate of how much you could get based on last year’s income and previous years. You will see a table with your monthly benefit for early, on time or deferred retirement.
When you are ready to collect your benefit, you can also use My Social Security to complete your pension application, among other things.
For more information, herein 2023. Even if you have to save for your pension, .