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However, according to a 2020 study conducted by the National Institute on Retirement Security (NIRS), only about 6.8% of older Americans receive income from all three legs of the retirement stool, and 40.2% of retirees receive retirement income from Social Security benefits only.
With that in mind, most seniors and future retirees have many questions regarding their benefits. It’s always good to get a refresher on the fundamentals of Social Security benefits, and who better to provide it than AARP — the nation’s leading voice for persons over the age of 50?
AARP released a revised list of 10 frequently asked questions that cover retirement concerns related to eligibility and enrollment. Click through for answers to questions on earnings, maximum benefit payments and more.
1. Is Social Security Only for Retired Workers?
As AARP noted, far from it. Nearly 73% of beneficiaries receiving Social Security are retirees, but more than 2.8 million spouses, former spouses and dependents (4.3%) collect benefit payments from the Social Security Administration (SSA), too. Additionally, more than 5.9 million widows and widower survivors (9%) and 7.8 million disabled persons (plus 1.3 million of their family members, totaling 14%) also receive payments from the SSA, as of April 2022.
2. At What Age Can You Start Collecting Social Security?
You can start receiving your Social Security retirement benefits as early as age 62, but you are entitled to full benefits when you reach your full retirement age (66 years and 4 months for people born in 1956, gradually rising over the next few years to 67), per the SSA. If you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase. Check out the SSA’s “Full Retirement and Age 62 Benefit By Year Of Birth” chart for more details.
You may also be eligible to collect earlier if you receive survivor benefits or Social Security Disability Insurance (SSDI).
3. How Do You Sign Up for Social Security?
For those who prefer interacting face-to-face, Social Security offices are now open after pandemic closures. It is recommended by the SSA to call for an appointment first. You can apply for all retirement, spousal or disability benefits online, as well, or by calling 800-772-1213. For survivor benefits, you can apply by phone or in person (not online).
4. How Long Do You Need To Work Before You’re Eligible?
You need to earn credits to be eligible for Social Security benefits. Specifically, you need 40 credits, earned by paying Social Security tax on what you earn, up to four credits per year. So, most people earn their credits in 10 years of working (but there is no time limit of how long it takes to earn 40 credits). As AARP explained, in 2022, one credit is equal to $1,510 in earnings, so you can make the maximum four credits after earning $6,040.
5. Must You Stop Working To Collect Retirement Benefits?
You do not have to stop working to receive Social Security benefits, but it may affect what you collect. Benefits are available to access at 62 years of age, and many seniors continue to work after opting to start their benefit payments. However, the amount you earn could potentially cause some or all of your Social Security benefits to be withheld, depending on your age and your income.
Using a 2019 example from The Motley Fool, if you are due to receive $16,800 in Social Security income, and you earn $60,000 per year, you will have earned $42,360 above the $17,640 allowable earnings threshold ($60,000 minus $17,640). Because benefits are reduced $1 for every $2 earned, so you can divide the excess earnings of $42,360 by 2 and see that $21,180 in benefits would be withheld. In this scenario, your entire Social Security benefit for that year would be withheld because it is more than the benefits you received.
The Social Security Administration website has plenty of information on retirement age and available benefits.
6. How Much Will You Get From Social Security?
The Social Security Administration calculates your benefits by using your highest 35 years of earnings as the base and plugs it into a formula weighed by an inflation-adjusted average rate and based on claim age. You can use the AARP Social Security Calculator to get an estimate of what you’ll be collecting in benefits, or set up an account with the SSA and access its Calculators section to get a more accurate measure.
7. What’s the Maximum Monthly Social Security Benefit?
According to AARP, to earn the overall maximum allowable Social Security benefit payment every month, you would have had to earn the equivalent of at least $147,000 in today’s dollars in 35 years of employment. And you would have to delay claiming Social Security until 70 when you qualify for your largest possible checks. The average person’s Social Security check is only about 40% of the maximum.
In 2022, a worker claiming Social Security at full retirement age could potentially receive the highest monthly amount of $3,345 — around double the average retirement benefit of $1,666 (as of April 2022).
8. How Can You Boost the Amount of Your Benefit?
The longer you wait to start collecting after you become eligible, the more you will receive. Say you were born in 1960. If you delay claiming Social Security until full retirement age, you’ll receive 100% of the benefit amount calculated from earnings over your life. Beyond full retirement age (66-67 depending on what year you were born), benefits increase 8% per year until you hit 70 (there is no further increase in benefits past the age of 70).
9. Can You Receive Benefits Based on Ex-Spouse’s Earnings?
Yes. If you were married at least 10 years, are at least 62 years old and have not re-married, you may be able to claim a benefit by being a divorced spouse. The maximum you could receive would be 50% of your former spouse’s full retirement benefit, but only if it exceeds your own benefit amount.
10. When Someone Dies, How Does Social Security Know?
Family members, funeral homes and government agencies notify the SSA of beneficiaries’ deaths, according to AARP. It recommends reporting a death of a family member to the Social Security Administration even if another agency will report it so that the information is recorded quickly and you get the peace of mind knowing that it is done.
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