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Social Security and Retirement

by rlcoch01 last modified Apr 13, 2011 04:43 PM

Some Things to Consider

Retirement can have more than one meaning these days.  It can mean that you have applied for social security retirement benefits . . . or that you are no longer working.  Or it can mean that you have chosen to receive social security while still working, either full or part-time.  All of these choices are available to you.  And your retirement decision can have very real effects on your ability to maintain a comfortable retirement.

If you retire early, you may not have enough income to enjoy the years ahead of you.  Likewise, if you retire late, you'll have a larger income, but fewer years to enjoy it.  Everyone needs to try to find the right balance, based on his or her own circumstances.

What is the Best Option for You?

Everyone's situation is different.  That is why Social Security has created several retirement planners to help potential retirees decide what would be best for them and their families.  Social Security has a new online calculator that can provide immediate and accurate retirement benefit estimates to help everyone plan for their retirement.

The online Retirement Estimator is a convenient, secure and quick financial planning tool.  It uses your own earnings record information, thereby eliminating any need to manually key in years of earnings information.  The estimator also will let you create "what if" scenarios.  You can, for example, change your "stop work" date or expected future earnings to create and compare different retirement options.  Retirement Estimator on the Social Security website . 

There is one more thing you should remember as you crunch the numbers for your retirement.  You may need your income to be sufficient for a long time, because people are living longer than ever before, and generally, women tend to live longer than men.  For example:

  • The typical 65-year-old today will live to age 83;
  • One in four 65-year-olds will live to age 90; and
  • One in 10 65-year-olds will live to age 95. 

Once you decide on the best age for you to actually retire, remember to complete your application three months before the month in which you want retirement benefits to begin.  Even if you don't plan to receive monthly benefits, you should sign up for Medicare three months before reaching age 65.  Otherwise, your Medicare medical insurance, as well as prescription drug coverage, could be delayed and you could be charged higher premiums.  Additional information about eligibility and costs.


It's So Easy to Apply Online for Benefits

The easiest way to apply for Social Security retirement benefits .  If you do not have access to the Internet, you can call 1-800-772-1213 (TTY number, 1-800-325-0778) between 7 a.m. and 7 p.m., Monday through Friday, to apply by phone.  You also can apply at any Social Security office.  To avoid having to wait, call first to make an appointment.


Receiving Benefits While You Work

When you reach your full retirement age, you can work and earn as much as you want and still receive your full social security benefit payment.  If you are younger than full retirement age and if your earnings exceed certain dollar amounts, some of your benefit payments during the year will be withheld.

This does not mean you must try to limit your earnings.  If Social Security withholds some of your benefits because you continue to work, Social Security will pay you a higher monthly benefit amount when you reach your full retirement age.  In other words, if you would like to work and earn more than the exempt amount, you should know that it will not, on average, reduce the total value of lifetime benefits you receive from Social Security--and may actually increase them.

Here is how this works:  After you reach full retirement age, Social Security will recalculate your benefit amount to give you credit for any months in which you did not receive some benefit because of your earnings.  In addition, as long as you continue to work, Social Security will check your record every year to see whether the additional earnings will increase your monthly benefit.

Many people can continue to work and still receive retirement benefits.  If you want more information on how earnings affect your retirement benefits, ask for How Work Affects Your Benefits (Publication No. 05-10069), which has current annual and monthly earnings limits, and is available on the Social Security website.


Retirement Age Considerations

Full Retirement Age

For persons born during the years 1943-1954, the full retirement age is 66.  If you were not born in this period, you can find your full retirement age on page 2 of your Social Security Statement.

Retiring Early

To qualify for benefits, you earn "credits" through your work--up to four each year.  For 2008, for example, you earn one credit for each $1,050 of wages or self-employment income.  When you've earned $4,200, you've earned your four credits for the year.  Most people need 40 credits, earned over their working lifetime, to receive retirement benefits.  If you've earned 40 credits, you can start receiving social security benefits at 62 or at any month between 62 and full retirement age.  However, your benefits will be reduced based on the number of months you receive benefits before you reach full retirement age.

If your full retirement age is 66, benefits will be reduced:

  • 25 percent at age 62;
  • 20 percent at age 63;
  • 13 1/3 percent at age 64; or
  • 6 2/3 percent at age 65.

Delaying Retirement

You may decide to wait beyond your full retirement age before choosing to receive benefits.  If so, your benefit will be increased by a certain percentage for each month you don't receive benefits between your full retirement age and age 70.  The rate your benefits increase if you delay retiring would be:

  • Year of Birth 1937 - 1938, the yearly increase rate would be 6.5%
  • Year of Birth 1939 - 1940, the yearly increase rate would be 7.0%
  • Year of Birth 1941 - 1942, the yearly increase rate would be 7.5%
  • Year of Birth 1943 or later, the yearly increase rate would be 8.0%

Rules That May Affect Your Survivor

If you are married and die before your spouse, he or she may be eligible for a benefit based on your work record.  If you start benefits before your full retirement age, Social Security cannot pay your surviving spouse a full benefit from your record.  Also, if you wait until after your full retirement age to begin benefits, the surviving spouse benefits based on your record will be higher.

To Obtain More Information

You can find answers to frequently asked questions about social security, learn about factors that could affect your benefits and much more by visiting Social Security online .

If you do not have access to the Internet, you can get information about Social Security by calling 1-800-772-1213 (1-800-325-0778 for the deaf or hard of hearing) or by visiting a local Social Security office.

Other Useful Websites 

This website contains calculators for financial planning and information on money-related matters, such as retirement planning and starting a small business.


Have you determined how much money you will need in retirement?  There are many tools available to help you, such as the Taking the Mystery Out of Retirement Planning Workbook (pdf) .


Are you looking for information about the investment options available to you as you enter retirement?  The Securities and Exchange Commission has a wealth of information on different investment products and topics .


This website has a variety of resources for seniors on topics including retirement planning, housing and health.

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