7 Issues You Ought to Do Earlier than Claiming Social Safety
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It’s never too early to start planning your retirement.
Even if you are not planning a traditional retirement, it is a good idea to consider how you will manage income in old age.
“I would love to work until I die because I love what I do,” said Stacy Johnson, founder of Money Talks News. “But I’ll want to cut something down at some point, and my social security strategy is part of that.”
When creating your own social security strategy, here are some things to do before applying for benefits.
1. Create a mySocialSecurity account
Would you like to stay up to date on your social security situation? Your mySocialSecurity account is your starting point.
As long as you are at least 18 years old and have a social security number, email address, and postal address, you can create an account.
Among other things, you can use your mySocialSecurity account to:
- Receive personalized estimates of future benefits.
- View your latest social security statement.
- Review your earnings history as described in the next section.
Creating an account can also help you prevent fraud. This is explained under “Don’t overlook this path to protecting your social security from identity thieves”.
To create a mySocialSecurity account, visit SSA.gov, the official website of the US Social Security Administration (SSA).
2. Make sure your earnings are correct
Your social security statement should include a record of your annual income. Check for accuracy before using any services and ideally check them regularly.
The amount of your monthly retirement pension depends on your top 35-year income. So if there is an error in your earnings record, your monthly payment can suffer.
Suppose an employer does not correctly report your income for even a year. According to the SSA, your retirement benefit could be around $ 100 less each month.
If you find an error in your earnings record, follow the SSA’s instructions to correct it.
3. Understand your full retirement age
Your full retirement age (FRA) is the age at which you are entitled to your “full” Social Security amount.
Your FRA is based on the year you were born. You can find out what it is by using the SSA’s retirement pension calculator.
While you can usually start social security from the age of 62, you will receive less than your full benefit if you file a claim before your FRA.
On the flip side, if you wait until after your FRA to receive your benefits, you will see a higher monthly payment up to the age of 70.
“I want to make my social security payment as high as possible,” says Stacy. “So I’ll wait until I’m 70. But if you need the money now, you may have to start paying as soon as possible.”
4. Estimate your retirement income streams
Roger Whitney, financial advisor and founder of The Retirement Answer Man website, says understanding your FRA and how it will affect your overall income in retirement is important.
“Get a clear picture of whether you have any retirement income – whether from your tax-privileged retirement account, a part-time job, or some other source,” Whitney told Money Talks News. “Also, pay attention to tax issues and what your required minimum payouts from a 401 (k) or IRA might be.”
5. Calculate your projected retirement costs
Don’t forget to estimate how much you will be spending in retirement. Consider creating a budget. Break down your needs into monthly costs.
Whitney suggests that you consider your lifestyle preferences and potential health needs:
“Do you think you will travel? Do you have a health account with which you can cover part of your health costs? How you live your life, whether you are scaling down or taking long vacations, and your health issues can affect your costs. Do your best to plan for them. “
When you know what your monthly retirement expenses will be, compare them to your expected retirement income. This will give you a better idea of how much Social Security income you want each month and what age you should start getting benefits.
Whitney recommends sitting down with a retiree who can help you find a course that makes financial sense for you.
According to Stacy, you can get a pretty good idea of how to go about it by ordering a custom analysis of your options from Social Security Choices. For more information on this, including how to get a discount on your analysis, see “One Easy Way to Maximize Your Social Security”.
6. Don’t forget your spouse
If one spouse dies, the other may be entitled to a survivor benefit equal to up to 100% of the deceased spouse’s Social Security benefit.
For this reason, a breadwinner may want to delay social security benefits in order to increase their benefit, and thereby increase their spouse’s survivor benefit, if the breadwinner dies first. Whitney says:
“Although it makes sense for you to start using social security, it may not help your spouse later. For baby boomers in particular, it is usually the woman who has the lower income and women usually have a longer life expectancy. This can be a problem for them later. “
7. Watch out for over-earning
Be realistic about whether you want to work in retirement.
You might decide to go back to work full-time or seek advice. If this happens before you have reached full retirement age, your social security benefit may be temporarily reduced.
The extent of success in your favor depends on several details, including your exact age and the income you earn while receiving Social Security. One expert sums it all up in the Social Security Questions and Answers: Will Making Money In Retirement Reduce My Social Security?
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