You’ve worked hard your whole life, but now you’re getting older and wondering when it will be time to retire. Although you might be ready, Social Security might not be, so explore your retirement options thoroughly before you call it quits for good. You have four options: 1) continue working and claim retirement benefits; 2) stop working and claim retirement benefits; 3) continue working and don’t claim benefits; or 4) stop working and don’t claim benefits.
In order to qualify for Social Security retirement benefits, be sure that the work you do meets Social Security criteria. The wages you earn must be taxed so that you pay into the Social Security system. Check to make sure your work has been taxed and recorded appropriately, or you could be in for a very nasty surprise when you decide to retire.
Next, you must have worked long enough to accrue the necessary work credits. The number of credits you need to retire under Social Security depends on when you were born. If you were born in 1929 or later, you need 40 work credits, or the equivalent of 10 years of work, in order to retire. If you stop working before you’ve earned the 40 credits, you can always resume working later and add subsequent credits to those you have already earned.
Your monthly retirement benefit will be based on how much you earned while you worked. In fact, many people work more than one job and work past their full retirement age to add to their work earnings history.
The earliest possible age you can retire under Social Security is 62, but that is considered under full retirement age; full retirement age is the age at which a person first becomes entitled to full, unreduced monthly retirement benefits. If you choose to collect retirement benefits at 62, your monthly benefit payment will be reduced permanently. And if you decide to stop working at 62 but don’t collect benefits right away, Social Security will factor in zeroes for every year you did not work before you reach full retirement age and decrease your monthly benefit accordingly.
To avoid the early payment penalty or the addition of zeroes into your work earnings history average, you must wait to collect benefits until you reach full retirement age. For those born in 1953 or earlier, you have already reached it. For those born between 1943 and 1954, full retirement age is 66. For those born between 1955 and 1960, the age gradually increases depending on which month you were born until you reach age 67. For those born in 1960 or later, full retirement age is 67.
To maximize your retirement benefits, consider working past full retirement age. If you do that, you’ll add to your lifetime earnings, which will mean higher monthly benefit payments when you do retire. And for every year you work past full retirement age and don’t collect benefits, Social Security increases your future benefits by 8% until you reach age 70.
Additionally, you can continue to work and collect retirement benefits, but your monthly benefits will be reduced if you earn more than the proscribed yearly earnings limit. If you are under full retirement age, $1 from every $2 that you make above $18,240 will be deducted from your monthly benefits payments in 2020. For the year that you reach full retirement age, $1 from every $3 that you make above $48,600 will be deducted.
If it’s time for you to apply for retirement benefits, you can do so online, on the phone, or in person at your local Social Security office. To apply online, you must meet certain requirements: 1) you must be at least 61 years and 8 months old; 2) you must not be currently receiving Social Security benefits on your own work record; 3) you must not have already applied for retirement benefits; and 4) you must want your benefits to start no more than four months from when you apply.
To apply, you should have your social security number, birth certificate, W-2s or self-employment tax returns, military discharge paperwork if you served in the military, proof of United States citizenship if you were not born in America, and the name of your bank, routing number, and account information for direct deposit.