6 important things to know about Social Security, even if you’ve been retiring for decades

Many people dream about the days when they will retire and do the things they didn’t have time for (like travel). But what they may not realize is that in the years leading up to retirement, there may be things to think about to achieve those retirement activities. For example, you have many options when it comes to: collecting your social security benefits — several of which may affect the amount you receive.

We tell you what you need to know about your Social Security money before you retire. If you’re nearing retirement, here’s the monthly social security payout schedule benefits.

Your Social Security money is based on your income

The amount of money you earn during your career plays an important role in determining how much money you receive from Social Security. If you have worked for a total of 45 years, only the highest income of 35 years counts towards your benefit. For example, if you earned $35,000 during the first 10 years of your employment history and $55,000 during 35 years, only the $55,000 income would count (so you get more money).

Here is more information about how your social security benefits are calculated.

There is a limit on the Social Security money you get each month

A person who earns $900,000 per year may not receive more Social Security money each month than a person who earns $200,000 per year. That’s because the Social Security Administration has a limit on how much income can be taxed by the administration. The maximum amount has changed over the years and is likely to continue to do so.

For 2022, the maximum taxable income is $147,000; in 2015, it was $118,500.

If you have more than one job and employers withhold more than the maximum from your salary, the taxes may exceed the maximum amount. If so, according to the SSA, you can claim a refund from the IRS for the money that has exceeded the maximum amount.

Here’s how the maximum amount you could get in 2022 is distributed monthly:

  • Collecting Social Security at age 62: $2,364
  • Collecting from social security at full retirement age: $3,345
  • Collecting Social Security at age 70: $4,194

Waiting for benefits years after retirement? Not so fast

If you plan to retire early — like age 60 — and live off savings and a 401(k) plan, stop there. If you retire before age 62, when you can officially receive Social Security benefits, all years not worked will show as $0 income and will still be included in your total Social Security wages.

Here’s why: The Social Security Administration uses your last 35 years of work history to calculate your monthly benefit after you retire. If you stop working and have less than 35 years of employment, or a lower income for other years worked, your benefit will be reduced.

If you continue working for another two years instead, any low earning years will be replaced by high earning years, which could increase your benefits.

Three $100 lying on top of each other

You don’t have to wait until full retirement age to receive benefits.

Sarah Tew/CNET

You can start collecting benefits before you reach full retirement age

You can’t start collecting your Social Security benefits at age 45 (sorry), but you can collect it before your full retirement age. The earliest age at which you can receive your benefit is 62 years; the full retirement age is 67 for anyone born in 1960 or later.

You must have 40 credits to qualify for Social Security benefits. 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 choose to start your benefit earlier, your monthly amount 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 collect 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 benefit will be increased by a percentage for each month that you defer your benefit after full retirement age up to age 70. If you were born in 1960 or later and wait to receive Social Security benefits until you are 70, you will get 124% of your benefits.

5, 10 and 20 dollar bills

You can get more money if you wait to retire.

James Martin/CNET

You can now view your estimated monthly pension amount online

If you’re interested in your estimated monthly Social Security benefits based on your current work history, you can do it quickly and easily. you will have to create a My Social Security account online.

Even if you’re still 20 years or more away from retirement, you can see an estimate of how much you could get based on last year’s income and previous years’ income. You will see a table with your monthly payment for early, on-time or deferred retirement.

When you are ready to collect your benefit, you can fill in a pension application via My Social Security, among other things.

For more information, here is how much social security benefits could rise? in 2023. Even if you have to save for your pension, this is the easiest way.

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