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Is retiring early a permanent reduction in SS benefits?

 
 
Reply Mon 2 Jan, 2012 07:04 pm
mr vw is really struggling, and his brother has him convinced that he can retire now (62) and still receive full benefits when he turns 65?

I told him I would ask those here who may have gone through it already for help.

He doesn't make much money, if that is an issue. self employed and bad insurance with health concerns...
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Type: Question • Score: 2 • Views: 2,781 • Replies: 10
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edgarblythe
 
  2  
Reply Mon 2 Jan, 2012 07:28 pm
I would say that the lower payments are permanent, based on the following

As a general rule, early or late retirement will give you about the same total Social Security benefits over your lifetime. If you retire early, the monthly benefit amounts will be smaller to take into account the longer period you will receive them. If you retire late, you will get benefits for a shorter period of time but the monthly amounts will be larger to make up for the months when you did not receive anything.

There are advantages and disadvantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit is reduced.


Another thing to consider is, 65 is no longer full retirement age. I had to be 65 and ten months. That was for persons born in 1942. Persons born later than me have a later age to consider.
Rockhead
 
  1  
Reply Mon 2 Jan, 2012 07:35 pm
@edgarblythe,
what age do they calculate you to supposed to be dead?
Butrflynet
 
  2  
Reply Mon 2 Jan, 2012 07:42 pm
@Rockhead,
http://www.ssa.gov/pubs/10147.html

Quote:
Monthly payments differ substantially based on when you start receiving benefits

Let’s say your full retirement age is 66 and your monthly benefit starting at that age is $1,000. If you choose to start getting benefits at age 62, your monthly benefit will be reduced by 25 percent to $750 to account for the longer period of time you receive benefits. This is generally a permanent reduction in your monthly benefit.

If you choose to not receive benefits until age 70, you would increase your monthly benefit amount to $1,320. This increase is from delayed retirement credits you get for your decision to postpone receiving benefits past your full retirement age. The benefit amount at age 70 in this example is 32 percent more than you would receive per month if you chose to start getting benefits at full retirement age.

You can keep working

When you reach your full retirement age, you can work and earn as much as you want and still receive your full Social Security benefit payment. If you are younger than full retirement age and if your earnings exceed certain dollar amounts, some of your benefit payments during the year will be withheld.

This does not mean you must try to limit your earnings. If we withhold some of your benefits because you continue to work, we will pay you a higher monthly benefit amount when you reach your full retirement age. In other words, if you would like to work and earn more than the exempt amount, you should know that it will not, on average, reduce the total value of lifetime benefits you receive from Social Security—and may actually increase them.

Here is how this works: after you reach full retirement age, we will recalculate your benefit amount to give you credit for any months in which you did not receive some benefit because of your earnings. In addition, as long as you continue to work and receive benefits, we will check your record every year to see whether the additional earnings will increase your monthly benefit.

Don’t forget Medicare

If you plan to delay receiving benefits because you are working, you should sign up for Medicare three months before reaching age 65, regardless of when you reach full retirement age. Otherwise, your Medicare medical insurance, as well as prescription drug coverage, could be delayed, and you could be charged higher premiums.

Additional Resources

You can estimate benefit amounts and find more information to help you decide when to start receiving retirement benefits by using our Benefits Planners. When you’re ready to apply for benefits, you also can apply online. Many people can continue to work and still receive retirement benefits. If you want more information on how earnings affect your retirement benefits, ask for How Work Affects Your Benefits (Publication No. 05-10069), which has current annual and monthly earnings limits.

roger
 
  2  
Reply Mon 2 Jan, 2012 07:42 pm
@Rockhead,
Eb is correct, both to the full retirement age and being stuck at that level of benefit. Furthermore, if his earned income exceeds a very modest level of somewhat less than $14,000/year (last time I looked) they recapture one dollar for every two dollars. Also, unless he had some really good earning years, his SS benefit isn't going to amount to much at any age. It is based on the average of the best 35 of the last 40 years worked.

But wait! Health concerns to the extend he could get on disability? I believe that would get him up to the same benefit as full retirement age. He might look into that. You might also - not to be intrusive.
edgarblythe
 
  1  
Reply Mon 2 Jan, 2012 07:42 pm
@Rockhead,
When they figure that out, they will make it retirement age.
Butrflynet
 
  2  
Reply Mon 2 Jan, 2012 07:47 pm
@Butrflynet,
http://www.ssa.gov/pubs/ageincrease.htm

Quote:

The Full Retirement Age is Increasing
Full retirement age (also called "normal retirement age") had been 65 for many years. However, beginning with people born in 1938 or later, that age gradually increases until it reaches 67 for people born after 1959.

The 1983 Social Security Amendments included a provision for raising the full retirement age beginning with people born in 1938 or later. The Congress cited improvements in the health of older people and increases in average life expectancy as primary reasons for increasing the normal retirement age.



Age To Receive Full Social Security Retirement Benefits

If your full retirement age is older than 65 (that is, you were born after 1937), you still will be able to take your retirement benefits at age 62, but the reduction in your benefit amount will be greater than it is for people retiring now.

Here's how it works. If your full retirement age is 67, the reduction for starting your benefits at

62 is about 30 percent;
age 63 is about 25 percent;
age 64 is about 20 percent;
age 65 is about 13 and 1/3 percent; and
age 66 is about 6 and 2/3 percent.

As a general rule, early retirement will give you about the same total Social Security benefits as full retirement over your lifetime, but in smaller amounts to take into account the longer period you will receive them.

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roger
 
  1  
Reply Mon 2 Jan, 2012 07:49 pm
@edgarblythe,
I don't doubt it for a minute. And if you die too soon, Sorry Charlie.
0 Replies
 
Rockhead
 
  1  
Reply Mon 2 Jan, 2012 07:56 pm
@roger,
I will mention it, but I don't know if his emphasema would qualify or not.

I've looked at it. (Bob was helping) but I can't qualify.

It's a hell of a process...
roger
 
  1  
Reply Mon 2 Jan, 2012 07:58 pm
@Rockhead,
Emphasema sounds like a sure winner if he's doing anything even vaguely physical. Now, whether it's worth forking over for countless doctors to get the disability certified is an entirely different matter.
0 Replies
 
PUNKEY
 
  1  
Reply Tue 3 Jan, 2012 09:01 am
First, he can call the SS's 800 number and see if he has paid into enough quarters to even draw on SS. (I only say this because many self-employed don't pay their FICA taxes, and are not paying into the system over the years) They will be able to tell him exactly what benefits he will have if he draws at age 62, 65 and 70 and it will state the disability figure, too. SS will send him a statement that lists everything for him.

This will have nothing to do with his health insurnace coverage. Medicare starts at age 65.

If he considers applying for SSID (Social Security Disability) then he will have to have his Dr. fill out the forms stating he is totally unable to work and then SS has their own Dr's. that have to state the same. It is a very long process, now the initial application is done over the phone. It is intensive and all your medical documents, with dates, diagnosis, etc. have to be at hand to answer the questions.

I have known some people who are YEARS into the process. However, my late husband got his decision in 2 weeks, but he was terminal for cancer when he applied.


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