The Social Security program is extremely important to a significant percentage of American senior citizens. However, you should certainly recognize the limitations, because benefits are often quite modest. At the same time, the income will help.

You may hear that you could start to collect a monthly Social Security benefit when you are 62 years of age. This is true, assuming you paid into the program sufficiently during your working career.

The FICA or self-employment taxes that you pay go toward benefit programs for seniors. If you accumulate at least 40 retirement credits while you are working, you will qualify for Social Security and Medicare.

During the 2020 calendar year, you get one credit for every $1410 that you earn, and it is possible to earn up to four credits in a year. Since these requirements are minimal, most people who work for any length of time will qualify for these government programs for seniors.

The age of 62 is the age of eligibility for what is considered to be early retirement. On the one hand, you may be excited about the prospect of a monthly payout at that age. However, you have to understand the fact that you would be receiving a reduced benefit if you start to draw a benefit when you are 62.

Depending on the exact year of your birth, the reduction would be somewhere between 25 and 30 percent at the time of this writing.

This is one drawback that goes along with an early benefit, but there is another significant pitfall. You cannot continue to work and earn unlimited money without being penalized. You can earn as much as $18,240 in a penalty free manner, but your benefit would be reduced by one dollar for every two dollars that you earn above this amount.

There are no guarantees with regard to your longevity, so that is an argument in favor of taking an early benefit if the income ceiling is not a problem for you. At the same time, if you live a normal lifespan, you will probably do better in the long run if you wait until you reach the age of full eligibility.

Full Benefit and Delayed Retirement Credits

If you decide to wait until you are eligible for your full Social Security benefit, the year of your birth will determine the eligibility date. People that were born between 1943 and 1954 start to receive a full Social Security benefit at the age of 66.

The age then goes up by two months each year, so someone that was born in 1955 would become eligible two months after their 66th birthday.

This arrangement continues until 1960. People that were born in that year and after can start to receive a full benefit at the age of 67. At the time of this writing, the average Social Security benefit for an individual is $1503 a month, which equates to $18,036 a year. The maximum benefit is $3011 each month.

We should point out the fact that the amount of your benefit will be determined based on the 35 years during which you earned the most amount of money. The Social Security Administration used to send out statements annually, but the practice was discontinued as a cost-cutting measure.

However, you can register your account on their website and find out what you can expect to receive when you become eligible for your benefit.

There is yet another move that you can make to maximize your Social Security benefit. You are allowed to delay the submission of your application beyond the date of your eligibility for a full benefit.

When you do this, you earn delayed retirement credits that will increase your benefit by 8 percent for every year that you delay. This can be the right choice for many people, but it should be noted that you do not earn any more delayed retirement credits after you reach the age of 70.

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You should certainly plan ahead with retirement in mind so that you can enjoy your golden years to the fullest. If you are ready to get started, send us a message or give us a call at (585) 546-1734 to request a consultation appointment.