The Social Security program is among the most important safety nets for Americans. It helps ensure seniors have an income to live on in retirement and provides benefits for disabled workers and their families. But how much can you expect to get from Social Security?
According to Bill Schantz, the answer depends on several factors, including your earnings history and when you claim benefits.
Your Earnings History
Social Security benefits depend on your earnings history. The program uses a formula to calculate your “primary insurance amount,” which is the benefit you would receive if you retire at full retirement age (currently 66).
Social Security looks at your 35 highest-earning years to predict your insurance amount. If you have less than thirty five years of earnings, the program will “fill in” the missing years with zeros. The extra years are ignored if you have more than 35 years of earnings. So, it doesn’t pay to delay claiming benefits past your full retirement age to get a higher benefit.
When Can You Claim Benefits As Per Bill Schantz
You can claim Social Security benefits once you are 62, but your benefits will be reduced if you do so. Conversely, you can delay claiming benefits past your full retirement age and receive larger benefits. The amount of the increase depends on how long you delay.
For example, your primary insurance amount is $1,000 per month. If you claim at age 62, your benefit would be reduced by 25 percent to receive $750 per month. If you delay claiming until age 70, your benefit will be increased by 32 percent to receive $1,320 per month.
According to Bill Schantz, the best time to claim benefits depends on your circumstances. You may want to claim early if you need the money. You may want to delay claiming if you can afford to do so and if you expect to live a long time.
Of course, you don’t always have a choice in when to claim benefits. If you retire before full retirement age and need the income, you may have no choice but to take reduced benefits.
Bill Schantz Explains Full Retirement Age
According to Bill Schantz, at your full retirement age you become eligible to receive your full Social Security benefit. For people born in 1960 or later, the full retirement age is 67.
Your benefits will be reduced if you claim benefits before reaching full retirement age. The reduction is greater the earlier you claim. For example, if your full retirement age is 67 and you claim benefits at 62, your benefit will be reduced by 30 percent.
If you delay claiming benefits past your full retirement age, your benefits will be increased. The increase is two-thirds of one percent for each month you delay up to age 70. So, if your full retirement age is 67 and you delay until 70, your benefit will be increased by 24 percent.
The decision of when to claim benefits is a personal one and depends on your circumstances. You may want to claim early if you need the money or if you don’t expect to live a long life. You may want to delay claiming if you can afford to do so and if you expect to live a long time.
Your Spouse’s Benefit
If you are married, you may be eligible for a spousal benefit in addition to your benefit. The spousal benefit amount is up to 50 percent of your spouse’s primary insurance amount. To receive a spousal benefit, your spouse must be registered for receiving Social Security benefits.
In some cases, it may make sense to claim a spousal benefit instead of your benefit. For example, let’s say you are 62 and your spouse is 66. Your primary insurance amount is $1,000 per month, and your spouse’s primary insurance amount is $2,000 per month.
If you claim benefits at 62, your benefit would be reduced to $750 per month. However, if you wait until 66 to claim benefits, you will receive your full benefit of $1,000 per month. In addition, your spouse would be eligible for a spousal benefit of $1,000 per month (50 percent of their primary insurance amount). So, in this case, it would make sense for you to delay claiming benefits until 66 so that you can receive both your own benefit and your spouse’s spousal benefit.
Of course, this decision depends on your personal circumstances. If you need the money sooner, it may make more sense to claim benefits at 62, even though your benefit will be reduced.
Bill Schantz’s Final Thoughts
The decision of when to claim Social Security benefits is a personal one and depends on your circumstances. You may want to claim early if you need the money or if you don’t expect to live a long life. You may want to delay claiming if you can afford to do so and if you expect to live a long time. It would help if you also considered your spouse’s benefit and income tax considerations when making your decision.