Social Security is a crucial element of American society, with approximately 67 million Americans receiving monthly benefits by 2023. For senior citizens, these benefits contribute around 30% of their income.
If you are close to retirement age and wish to begin receiving Social Security benefits, or if you are responsible for someone who is eligible for these benefits, you may have inquiries. The following are responses to frequently asked questions.
1. When can I start receiving Social Security benefits?
Although you can begin receiving Social Security benefits at age 62, it is not your full retirement age (FRA). If you were born after 1960, your FRA is 67. Waiting until you are 70 years old will allow you to receive the maximum amount of Social Security benefits.
If you decide to start getting benefits at 62 years old or earlier, your payments will be smaller than if you wait until full retirement age. But if you wait past full retirement age, you may be eligible for delayed retirement credits that will raise your monthly Social Security payment.
2. How are my Social Security benefits calculated?
The amount of Social Security benefits you receive is based on your lifetime earnings, calculated using your average indexed monthly earnings (AIME). AIME is the average amount you earned over a maximum of 35 years. Your benefit amount may be higher or lower than your AIME, depending on your earnings and the national average wage index.
If you choose to retire after the typical retirement age, you will receive more benefits compared to retiring at 62 years old.
3. What happens to my Social Security benefits if I continue to work after I start receiving them?
It is possible to receive Social Security benefits while working, and you will still contribute to Social Security with each paycheck. Your job’s earnings will determine the amount of benefits you receive.
If you decide to begin receiving Social Security benefits before you reach your full retirement age and your annual income surpasses a specific limit, your benefits will be reduced. If you are below the full retirement age for the whole year, Social Security will decrease your benefits by $1 for every $2 you earn over the yearly limit. The yearly limit for 2023 is set at $21,240.
4. Can I receive Social Security benefits if I’m still working?
Even if you continue working or intend to go back to work after you begin receiving Social Security benefits, you can still qualify for them. However, the amount of benefits you receive will be based on your earned income and may be reduced.
5. What is the maximum Social Security benefit I can receive?
The amount you can earn from Social Security varies based on your retirement age. If you retire in 2023, the following are the highest benefits you can receive: $2,572 at age 62, $3,627 at full retirement age, and $4,555 at age 70.
6. How do I apply for Social Security benefits?
To apply for Social Security benefits, visit the website of the Social Security Administration. You can apply on behalf of someone else or for yourself. Before applying, it’s a good idea to verify your eligibility for benefits.
Social Security benefits can be used for reasons beyond retirement. If you are unable to work due to a disability, experience the loss of a spouse, or are struggling to pay for necessities, you may be eligible to apply for benefits. Determining your eligibility can help you identify which benefits you qualify for.
Bottom line
Social Security benefits are available to eligible individuals, including those who are still working and of age. If you meet the criteria, you may qualify to receive these benefits.
Note that Social Security may not cover all of your income. If you are unable to work due to health issues, there may be other government programs for which you qualify. Additionally, you can use retirement plans like an IRA or a 401(k) to help cover expenses as you transition into retirement.