This social security calculator can be useful for determining what could be your ideal age for applying for social security retirement benefits. It takes into account the financial aspects and gives results according to the age bracket of 62-70 years that is considered the required range for filing these benefits.
Social Security, established first back in 1935 in accordance with US Social Security Act, offers Americans with monetary assistance if they have no or inadequate income. This is, basically a welfare program, based mainly on the employee/employer contributions withheld from the paychecks as payroll taxes when a person was working. The deducted funds are accumulated and then distributed to the people actually qualifying for these distributions. Americans who go past 62 years of age are not the only ones to qualify. In fact, those who get disabled and the surviving kids/spouses are all eligible for social security benefits. They can apply for these benefits and may successfully receive distributions as well.
The retirement benefits can be applied for as soon as a person reaches age 62 but not after the age of 70. Though 62 years is the minimum age at which these benefits become available, you can achieve maximum benefits at 70 years of age. No matter what, the eligibility age for one to begin getting the social security benefits after retirement depends basically on their year of birth; this referred to as full retirement age or FRA.
Quite a few factors are there that must be taken into account while determining ideal age for applying for the social security factors. These 1-
2- Immediate cash needs
3- Life expectancy
4- Marital status
5- Currently earned income
6- Relative income, age, and spouse's health
Considering all these factors, every individual should perform an evaluation of the unique situations they are in for determining their ideal age for applying for the social security benefits. Alternately, a social security calculator can come in handy and can help you determine the same.
A person who is 62 years of age and doesn't have any income must be struggling for making both ends meet and surely qualifies for social security claims. Furthermore, if their life expectancy is not that much, getting benefits sooner will allow them to have better income before their death.
Similarly, consider a case of a marriage where one spouse was earning higher in the working years than the other who also has a greater life expectancy then they must delay applying for social security benefits as much as they can. Everyone can't wait until the age of 70 years to get maximum social security benefits due to the aforementioned factors or for any other possible reasons.
If you are amongst those who are active investors or you're optimistic about specific investment opportunities coming your way that may outweigh 25 percent reduction in the monthly benefits resulting from filing claims earlier than the FRA, you can claim your benefits earlier as well at age 61. Generally, however, people having enough amounts in the savings accounts and maintaining good health prefer to claim their benefits at a later time in their life as they find it more desirable financially. But one has to ensure that they don’t go past 70 years of age while waiting for the right time to file their claims.
There is a slight increase in social security benefits on a yearly basis and this increase is because of cost-of-living adjustment. Cost-of-living adjustment is, basically, a measure that is applied for taking care of inflation that increases with time. The purpose of such an adjustment is to make sure that buying power of social security and the Supplemental Security Income remains equal to what it used to be in yesteryears, even after the steady increases in inflation. The calculation of the Cost-Of-Living adjustment relies on Consumer Price Index for Urban Wage Earners & Clerical Workers, from 3rd quarter of the year cost-of-living adjustment was determined last time, to 3rd quarter of current year. In case, if there isn't any increase in inflation on yearly basis, there won’t be any cost-of-living adjustment.
There is a slight increase in social security benefits on a yearly basis and this increase is because of cost-of-living adjustment. Cost-of-living adjustment is, basically, a measure that is applied for taking care of inflation that increases with time. The purpose of such an adjustment is to make sure that buying power of social security and the Supplemental Security Income remains equal to what it used to be in yesteryears, even after the steady increases in inflation. The calculation of the Cost-Of-Living adjustment relies on Consumer Price Index for Urban Wage Earners & Clerical Workers, from 3rd quarter of the year cost-of-living adjustment was determined last time, to 3rd quarter of current year. In case, if there isn't any increase in inflation on yearly basis, there won't be any cost-of-living adjustment.
What Can Undermine Your Social Security Benefits?
The first thing is exactly what this social security calculator is all about. Yes, timing matters! Even though you can use this social security calculator for determining what the optimal time for you to start drawing your social security benefits is, remember that each year that you wait will increase the benefit amount by 8% until you reach the age of 70. On the contrary, financial costs associated with claiming the benefits prior to reaching the actual retirement age may be quite high. And, these costs grow more for those who are healthy and can surpass the standard life expectancy quite easily.
Similarly, if you continue to work and start drawing your social security benefits early, it will be a temporary setback for your benefits. When you take benefits while youre still working, you may be required to pay a part of your benefits to the Social Security again. For each $2 that you earn, you may be paying $1 back or it is simply withheld. Even though these benefits are paid back to you when you reach the full age of retirement, this aspect must be taken into consideration when you decide to start drawing your social security benefits before the retirement age. Another thing that you should be wary of is the Medicare premiums. You become eligible for Medicare when you reach 65 years of age, and if you are already receiving Social Security benefits, the premiums are deducted automatically from the benefit amount. The Medicare premiums may be small but they're important when it comes to the planning of your retirement income.
Besides these factors, it is important to use a social security calculator that can help you determine the best plan for drawing your social security benefits according to your own specific situation. There are many such calculators out there that are meant for old-aged couples, singles and women. These calculators work for different situations and help you determine which route you should take to make the most of your social security benefit. In fact, one such social security calculator is available here that takes into account when it would be in your best interest to start drawing your social security benefits. Let's take a look at how this social security calculator works and what factors it takes into account.
The working of this social security calculator is pretty simple and it only needs a few inputs from the user for determining their best time for claiming social security benefits. It requires you to enter your birth year, life expectancy, investment return rate per year and the cost of living adjustment per year. Once you have entered all these values in the social security calculator, hit the calculate button and the calculator will show you the results right away. The result shown by the social security calculator is, basically, a suggestion as to what would be the best age for you to apply for your social security benefits. This suggestion is purely based on the financial aspect. The calculator tells you how much time it will be after your normal retirement age for which you have to wait to get the social security benefits. Besides, it tells you how much your benefit will increase from the primary amount of your insurance when you choose to file your claim at this age. So, use this social security calculator for determining your ideal age to file the claim for social security benefits. It will help you get the maximum benefit just by claiming it at the right time.