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What’s Social Security?
Many people think of Social Security as a retirement program, and it is a key piece of your retirement planning. It’s a federal government program that provides a source of income for you or your legal dependents (spouse, children, or parents) if you qualify for benefits. Social Security replaces a percentage of a worker’s pre-retirement income based on your lifetime earnings. The amount of your average earnings that Social Security retirement benefits replaces depends on your earnings and when you choose to start benefits.
Your Social Security number (SSN) is a unique identifier assigned to you at birth for the sole purpose of tracking your earnings history. It allows the Social Security Administration to determine and calculate your social security benefits as you age. You must have an SSN to pay taxes. Noncitizens who are authorized to work in the United States also receive SSNs. If you are a noncitizen, you may be permitted to work before receiving an SSN but must have a letter from the Social Security Administration stating that you have applied for a number.
Delayed Retirement
Increasing Your Retirement Security
Delaying retirement may help you continue to build wealth, but it comes with its own set of challenges and may not be possible for everyone. If you are considering a delayed retirement or late-in-life career change, do your research and consider and how other people have made the change.
Delayed Retirement
A postponed retirement, sometimes called a phased retirement, can be used to increase your retirement savings by adding to your savings, but can also delay the need to access your retirement savings. You may not be able to or want to delay your retirement because of health-related work limitations, caregiving responsibilities, or a forced early retirement. If you are able to delay your retirement Social Security retirement benefits will be higher (depending on date of birth) if you delay your retirement beyond full retirement age. The benefit increase no longer applies when you reach age 70, even if you continue to delay taking benefits. Retirement planning is key to determining when you should retire.
Second Careers After 50
Launching a second career in your 50s, 60s, or 70s has become more common. If you are considering this option, it could be because you can't afford to retire on your current savings and Social Security benefits; or you have comfortable retirement savings but want to stay active, test out a hobby-job, become an entrepreneur, or get involved in your community.
Frequently Asked Questions
Deciding when to start receiving Social Security retirement benefits is one of the most important decisions you will ever make and depends heavily on your circumstances. You can start collecting benefits based on your work history as early as age 62, or sooner if you are disabled, or wait until your full retirement age. The most important thing is to make an informed decision. Base your decision about when to apply for benefits on your personal and family circumstances.
Your Social Security Statement is available to view online by opening a my Social Security account. This statement lists your projected benefits between age 62 to 70, assuming you continue to work and earn about the same amount through those ages. Remember, the Social Security Administration (SSA) base your benefit payment on how much you earned throughout your working career.
You can apply for retirement benefits up to 4 months before you want to start receiving your benefits so you can avoid a gap in income. For example, your first check will not arrive until the month after the one you pick in your application.
The most convenient way to apply for retirement benefits is by completing the online application. You will need to create or log in to your personal my Social Security account. You can also apply by directly calling the Social Security Administration at 800-772-1213 (TTY 800-325-0778), Monday through Friday from 8:00 a.m. to 7:00 p.m. local time or visiting your Social Security office.
You cannot keep retirement funds in your account indefinitely. You generally have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age 72 (73 if you reach age 72 after Dec. 31, 2022). Your required minimum distribution is the minimum amount you must withdraw from your account each year. You can withdraw more than the minimum required amount. Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts). For more information visit www.irs.gov.
A postponed retirement, sometimes called a phased retirement, can be used to increase your retirement savings by adding to your savings, but also by delaying the need to access your retirement savings. However, delaying your retirement may not be an option for you due to health-related work limitations, caregiving responsibilities, or a forced early retirement. Depending on your retirement planning, if you are able to delay your date of claiming Social Security, the retirement benefits are increased by a certain percentage (depending on date of birth) if you delay your retirement beyond the full Social-Security-Administration -defined retirement age. The benefit increase no longer applies when you reach age 70, even if you continue to delay taking benefits.