When to Take Social Security
Here’s how it works: Log onto www.socialsecurity.gov/estimator. Simply enter your name, date of birth, Social Security number, mother’s maiden name and your place of birth into the estimator. If it matches information in the administration’s database, then the system will display what you would reap based on your current earnings, depending on when you choose to retire. Further, you can find out how your Social Security payments might change if your earnings increase or decrease in the future.
If you are still working at age 62, your social security benefits will be penalized. But if you wait until your full retirement age, you can continue working and your social security benefits will not be penalized. As of 2009, if you take your benefits at age 62 and if you earned more than $14,160, your social security benefits will be penalized $1 for every $2 you earn over $14,160.
Experts are advising people not to take their benefits at 62, but rather waiting until their retirement age, or better yet, until 70. Age 70 is the latest age you can apply for social security benefits. The benefit of waiting to take your benefits may be worthwhile if you expect to live several more years and can continue living on the money you have. Your social security benefits will increase 5 - 6% between ages 62 and 65 and will increase 8% every year after age 66. Waiting until age 70 means that if you live to be age 80 or 90, you will be receiving larger checks because you did wait.
Depending on your income level when you take your benefits, you may be subject to income tax. Less than one-third of current social security beneficiaries pay income tax on their benefits. If you file your tax return as an individual and earn more than $25,000, you will be taxed on your benefits. If you file your tax return jointly with your spouse, you will be taxed on your benefits if your income exceeds $32,000.
You should consider early benefits if...
* You're no longer working and really can't make ends meet without your benefits.
* You're in poor health and don't expect to make it to the average life expectancy.
* You're the lower-earning spouse and your higher-earning spouse can wait to file for a higher benefit.
You should consider waiting to take benefits if...
* You're still working and make enough to impact the tax liability of your benefits. (At least wait until normal retirement age so benefits aren't further reduced due to earnings.)
* You're in good health and expect to exceed average life expectancy.
* You're the higher-earning spouse and want to be sure your surving spouse receives the highest possible benefit.
Just released this week, it is expected that there likely won't be an increase in social security benefits this year and possibly next year due to the fact that there is no inflation. The Consumer Price Index has gone negative rather than positive over the past month or so. This may benefit Americans not yet receiving benefits as the social security benefits will last longer. Currently, it is expected that social security benefits will run out in the year 2047 and some are even projecting 2037. On the other hand, people receiving benefits are affected as they may be relying on that increase.
The negatives of a freeze of benefits include:
* A halt on premiums paid into Medicare; and
* Recipients will incur an increase in premiums for drug coverage provided under Medicare Part D.
The average 2009 monthly social security benefits are as follows:
* Retired worker - $1,153
* Retired couple - $1,876
* Disabled worker - $1,064
* Disabled worker with spouse and child - $1,793
* Widow or Widower - $1,112
* Young Widow or Widower with 2 children - $2,399
