As estate planning attorneys, we also help people who are looking ahead toward their senior years, because the entire process is interconnected. Since we provide retirement planning assistance, we will look at Social Security benefits in this blog post.
When you work throughout your life, you pay self-employment or payroll taxes. These taxes go toward programs that will provide you with a bit of a safety net during your retirement years. Medicare is a source of health insurance, and Social Security will provide you with a relatively modest stream of income.
To qualify for these programs, you must earn at least 40 retirement credits during your working career. This is easily accomplished, because you can accumulate up to four credits each year, and you get one credit for every $1,220 that you earn in 2015.
So, even if you earn a very modest amount of money, you will qualify for these programs if you work for at least 10 years. At same time, the amount of your Social Security benefit will be tied to the amount of your contributions throughout your life. The more you make, the higher your benefit will be when you do start to receive a monthly direct deposit.
However, there is a limit on the amount of your earnings that can be subject to payroll taxes. During the current calendar year, the limit is $118,500.
It is possible to accept a reduced benefit when you are as young as 62 years of age. The exact amount of the reduction would depend upon the year of your birth, but it would be somewhere between 30 and 35 percent. Clearly, if you want to receive the maximum benefit, you would not want to accept an early Social Security benefit.
The age at which you obtain full benefit eligibility also depends upon your birth year. People who were born between 1943 and 1954 become eligible at the age of 66, and the full eligibility age then goes up by two months per year until it reaches 67 in 1960. People born in 1960 and after become eligible for full benefits at the age of 67.
If you want to maximize your Social Security benefit, you could delay the submission of your application beyond the age of full eligibility. You can increase your benefit by eight percent for each year that you delay the submission of your application beyond your full retirement age. However, this maxes out at the age of 70.
To find out exactly where you stand based on your own contributions, register your account on the Social Security Administration website. Click this link to reach the appropriate page: My Social Security.
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