Many people dream of the days of retirement and doing the things they didn’t have time for (like travel). But what they may not realize is that in order to get to those retirement activities, there may be things to consider in the years leading up to retirement. For example, you have many options when it comes to collecting your Social Security benefits — some of which may affect the amount you receive.
We’ll tell you what you need to know about your Social Security money before you retire. If you’re close to retirement, here it is monthly Social Security payment schedule Benefits.
Your Social Security money is based on your income
The amount of money you make during your career plays an important role in determining how much money you will receive from Social Security. If you work a total of 45 years, only the highest 35 years of earnings will count toward your benefit amount. For example: If you earned $35,000 in the first 10 years of your employment and $55,000 in 35 years, only the $55,000 of income will count (so you’ll get more money).
Here is more information about how your social security benefits are calculated.
There is a cap on the amount of Social Security money you receive each month
A person making $900,000 a year may not get more Social Security money each month than a person making $200,000 a year. This is because the Social Security Administration has a a cap on how much income can be taxed from the administration. The maximum amount has changed over the years and will likely continue to change.
For 2022, the maximum taxable profit is $147,000; in 2015 it was $118,500.
If you work more than one job and employers deduct more than the maximum from your wages, it is possible that taxes will exceed the maximum amount. If this is the case, you can claim a refund from the IRS for the money that exceeds the maximum amount, according to the ZSPZZ.
This is how you can get the maximum amount of money breaks down monthly in 2022:
- Collecting Social Security at age 62: 2364 dollars
- Collecting social security at full retirement age: 3345 dollars
- Collecting Social Security at age 70: 4194 dollars
Waiting to collect benefits years after retirement? Not so fast
If you’re planning to retire early — at age 60, for example — and live off savings and a 401(k) plan, stop right there. If you retire before age 62, when you can officially start receiving Social Security, all non-working years it will show as $0 income and still be included in your total Social Security pay.
Here’s why: The Social Security Administration uses your last 35 years of work experience to calculate the amount of your monthly benefit after you retire. If you stop working and have less than 35 years of service or lower earnings for other years of work, your benefit amount will be reduced.
If you instead continue to work two more years, any low-earning years will be replaced by high-earning years, which may increase your benefit amount.
You can start collecting benefits before full retirement age
You can’t start collecting your Social Security benefits at age 45 (sorry), but you can collect before full retirement age. The earliest age you can start receiving your benefits is 62; the full retirement age is 67 for anyone born in 1960 or later.
You must have 40 credits to qualify for social security. Credits are earned when you work and pay Social Security taxes. On average, it takes about 10 years of work to earn 40 credits.
If you decide to start receiving your benefits earlier, your monthly payments will be reduced by 30% (if you were born in 1960 or later).
You’ll get more money if you wait to cash in your Social Security
You probably know that if you wait until full retirement age to receive your Social Security benefits, you will receive 100% of your benefits. But if you decide to wait until age 70 to retire, you’ll get even more money.
Your benefits will increase by a percentage for each month you delay receiving benefits after full retirement age until age 70. If you were born in 1960 or later and wait to start getting Social Security until age 70, you’ll get 124% of your benefits.
You can see your estimated monthly retirement amount online now
If you’re interested in seeing your estimated monthly Social Security benefit amount based on your current work history, it’s quick and easy. I will have to create a My Social Security account online.
Even if you’re still 20 or more years away from retirement, you can see a forecast of how much you could get based on last year’s earnings and previous years of work. You will see a table that shows the amount of your monthly benefit for early retirement, on time or late.
When you’re ready to receive your benefits, you can also use My Social Security to fill out a retirement application, among other things.
For more information, here how much Social Security could increase in 2023. Also, if you need to save for retirement, this is the easiest way.