Social Security Retirement
Social Security is a system of providing a continuing income to a person or their family if their earnings stop or are reduced by disability, death, or retirement. Although the Social Security payments will not substitute all lost income, every individual should supplement it with investments, savings, other insurance or pensions. In 1973 when Social Security took effect, it covered workers in industry and commerce, which accounted for only sixty percent of all the working individuals. By way of universal coverage, the Social Security Act has been improved over the years.
In order to qualify for the Social Security retirement benefits, the number of credits required to be eligible for the benefits also depends on the type of benefit. A general “rule of thumb” is that individuals need forty credits or ten years of work to obtain Social Security retirement benefits. It is not an issue of when the credits are earned, neither is the dollar amount of the benefit based on the number of credits. All credits earned will remain on record even if the individual has not worked for a period of time. The benefit amount is based on the individual’s earnings averaged over the most of their working career; bigger lifetime earnings result in bigger benefits. If there are some years of no or low earnings, the Social Security retirement benefit will possibly be lower than if one has worked steadily.
One can retire as early as the age of sixty-two and receive benefits for the rest of their life. However, the age at which they opt to retire is a very essential consideration and can have significant impact on how much payment they receive each month. Think about these possibilities:
Full Retirement Age
The present full retirement age is sixty-five but will gradually increase to sixty-seven. The method is designed so that if one has average earnings during their working life and retire at the full retirement age, the benefit they will receive in their first year of retirement will roughly equal forty-two percent of what they earned in the year just before they retired. Regardless of what one’s earnings are, the maximum benefit that can be received from Social Security retirement benefits is decided by the Social Security law. From year to year, the maximum amount for benefits received changes.
If one begins their Social Security retirement benefits as early as sixty-two, the benefit amount they would receive is permanently reduced due to the longer period over which they would be receiving the payments. They would continue receiving the lower amount even after sixty-five. One should consider applying for Social Security disability benefits if they retire early because of unable to work due to poor health. Disability benefits payments are the same as full retirement benefit.
Deciding to retire at a later age than the full retirement age can increase one’s benefit in two ways: every added year of work adds another year of earnings to the Social Security record; the benefit will be increased by certain percentage if delayed retirement, the increase will be added automatically from the Normal Retirement Age time till that start of receiving benefits or until reaching the age of seventy.