Social Security Benefits
Social security benefits can be part of your retirement income plan. Rather than guess on your anticipated benefits, use the Social Security Administration online calculator. The calculator provides estimated retirement benefits if you continue to work to a given retirement age. The minimum Social Security retirement age is between 66-67 (see the official chart.) Nevertheless, if you work longer (up to age 70) your benefits increase. There is even a "break-even" calculator.
Receiving benefits at age 62 will cost you
Because Social Security benefits for early (age 62) retirement are reduced by employment income, if you plan on working, delaying social security benefits may be wise. Also, because your other taxable income is not considered in the caculator, delaying benefits may yield higher after tax income in the long run. If you do decide to start collecting Social Security at age 62 you will suffer a reduction in benefits of 25% or more for the rest of your life. Adding to this problem,if you continue to work, you could run up against the earnings cap, which in 2010 takes away $1 in benefits for every $2 you earn over $14,160. If, instead,you wait to collect benefits until your normal retirement age of 66 (for those born between 1943 and 1954; older for those born later) you can earn as much as you want without giving back your benefits to the government. another advantage is that since your first check is larger than under an early retirement age, the larger amount becomes the basis for future cost-of-living adjustments.
Collecting benefits when you're married
Married couples have the benefit of selecting either to collect their own benefits or the level of their spouse's benefits. For example, if the husband's earnings are much higher than the wife's,the wife can start collecting benefits based upon the husband's earnings record even if the husband is not ready to retire. In addition, if the husband wants to work until age 70, he can file and suspend his benefits at his normal retirement age. This means the wife continues to collect the higher benefit of the husband without affecting his ultimate ability to collect the increase benefit for waiting. if both spouses have comparable incomes, and the husband does not want to retire at normal retirement age, he can file a claim for his wife's benefits when he turns age 66.he is then collecting at his wife's level without interfering with his ability to collect the increased benefits at age 70.
Tricks for divorced spouses
Former spouses can collect benefits based on your earnings records if they were married to you for 10 or more years. At your retirement age they can collect based on your record. If your former spouse dies, you can collect 100% of what he or she would have collected.
Wait Until You are 70 to Retire
If you wait until age 70 your benefits increase because of the delayed-retirement credit. This delayed benefit is is worth 8% a year. If you would collect $1000 a month at your normal retirement age is 66, your check would grow to $1,320 -- a full 32% more by waiting to retire until age 70. If you retired four years early, at 62, your monthly payment would be just $750. because average life expectancies are increasing, you should consider delaying retirement and collecting social security benefits until age 70.
Give back your benefits and start over!
If you are in good health when you reach your normal retirement age, 66, or the delayed retirement age of 70, you should consider paying back your benefits that you have received, and starting to receive the higher benefits of the later retirement age. You have to pay the money received back to the government There is no interest charged on this, and you get to file amended tax returns to collect any income tax he paid. in some circumstances this can be a great benefit.
Remember, the Social Security is an important part of your retirement and estate financial plan.These issues should be discussed with your lawyer prior to making a decision.
Please call Ronald J. Cappuccio at (856)665-2121 before making your Social Security retirement decision!