We focus on elder law issues, and many people who are planning ahead for their senior years have questions about Social Security. You should certainly have a full understanding of this program when you are devising a long-term financial plan.
Everyone does not automatically become eligible for Social Security. You obtain eligibility through FICA tax contributions that you make throughout your working career. These taxes are pesky, but you do get something in return if you are fortunate enough to live until you reach the age of eligibility.
The eligibility age is not a single figure that is etched in stone. Your age of eligibility depends on your birth year. If you were born between 1943 in 1954, you become eligible on your 66th birthday.
Those were born in 1955 become eligible two months after they reach the age of 66. This two-month per year graduation continues until 1960 when the age of eligibility reaches 67. Those were born after 1960 will also become eligible for their full benefit at the age of 67.
The amount of your full benefit will be based on your earnings during your top 35 earning years. Throughout 2014 the maximum Social Security benefit has been $2642.
Without question, you should plan ahead with knowledge of your anticipated benefit level. The Social Security Administration used to send out annual statements, but the costs were significant. In a cost-cutting measure, they discontinued this practice, but you can visit their website to obtain an estimate of your benefit.
You are not required to wait until you reach the age of full benefit eligibility. It is possible to accept the reduced benefit when you are as young as 62 years of age.
The amount of the reduction would be based on your full retirement age. If you are not already receiving Social Security and you retire at age 62, it would be somewhere between 25 and 30 percent under currently existing parameters.
You can go in the other direction and delay your application for your Social Security benefit beyond your age of full eligibility. If you go this route, you will earn delay retirement credits. Your benefit will increase by eight percent for each year that you delay beyond your full eligibility age.
However, there is a ceiling on the accrual of delete retirement credits. You stop accumulating these credits when you are 70 years of age, so there is no incentive to delay once you reach this age.
Free Retirement Planning Consultation
Most people are not going to be able to live comfortably on Social Security alone. If you want to be able to retire in comfort, you have to plan ahead in an intelligent and effective manner.
We can help if you are ready to put a plan in place. To schedule a consultation, send us a message through this page: Long Island NY Retirement Planning Attorney.