Entering retirement? Social security is a lifeline for many individuals. Here’s what you need to know about receiving retirement benefits.
Full Retirement Age
If you were born after 1929 and you’ve worked for 10 years – the minimum number of years needed to earn 40 mandatory credits – you’re eligible for retirement benefits. You build up your credits based on your earnings. The full retirement age is 67.
The earliest you can start receiving benefits is age 62, but you’ll get only 70% of your monthly benefits since you’ll be receiving benefits for 60 additional months.
If you wait until you’re 70, however, you can get as much as an 8% boost in benefits every year.
The program also provides survivor and disability benefits. Your contributions may serve as insurance if you become disabled, or if your adult child becomes disabled before turning 22.
Moreover, your surviving spouse and children may receive benefits after your death.
How to Apply
You can apply for benefits online, by phone, or in person by going to the nearest Social Security office. If you’re based outside of the United States, you may approach a US embassy or consulate.
You need to be 61 years and 9 months old to be able to apply for benefits.
If you’ve already turned 62, you can start your benefits the month you apply. Keep in mind that you must apply at least four months before the date you’d like to start receiving benefits. Benefits must also be paid the month after they’re due.
The Social Security Administration (SSA) will calculate your Average Indexed Monthly Earnings (AIME) by looking at 35 of your highest-earning years. Those 35 years don’t need to be consecutive, but any year where you didn’t generate income will be penciled in at zero.
You’ll need to provide documents, such as your birth certificate, to prove that you’re eligible.
There are many nuances regarding the amount you can expect to receive from Social Security, but retired workers receive about $1,336 in benefits, on average. The maximum amount you can get from Social Security is $2,687.
The SSA enforced an increase of .3% for monthly payments in 2017, in line with the inflation for the cost-of-living adjustment (COLA) in the US.
Take Your Future Into Your Own Hands
While social security can augment your retirement income, it’s unlikely that you’ll be able to live off of benefits alone. Safeguard your retirement with your own personal savings.
You’ll need another source of funding, such as an Individual Retirement Account (IRA), a 401(k) plan sponsored by your employer, or a pension, for when you retire. It also helps to have an investment portfolio, so start building one as soon as you can.
And remember, your Social Security number should be confidential. Refrain from sharing it on social media to avoid cases of identity theft. Guard your number when filling out paperwork at hospitals, clinics, universities, and other places where a data breach is likely to take place.
A good understanding of how retirement benefits work will help you make preparations for the future.