Almost 55 million people currently receive Social Security (SS) retirement benefits. It’s a staggering number reported by the Social Security Administration, but the focus of attention of news outlets and social media platforms is a recent surge in the number of retirees filing SS claims for early retirement benefits.
An array of answers exists to the question, “Why claim SS early?” This article identifies some of the early retirement benefit reasons that compel people not to wait longer before filing for Social Security. It also explains the advantages, disadvantages, and alternatives to filing for early retirement benefits through the Social Security Administration that could work to your advantage.
Why Are Retirees Filing Early SS Claims?
The news out of the nation’s capital has people on edge and wondering whether changes to federal law may affect their Social Security retirement benefits. Some of the concerns include the following:
- Congress may change the retirement age, so you must wait longer to apply for retirement benefits.
- Fears that the Social Security retirement program may run out of money before they reach full retirement age.
- Recent news about staff reductions has people worried about the future of the Social Security Administration.
- Changes in the national economy could have people looking for additional income by accessing their SS benefits.
It’s important to note that Congress has not recently enacted or proposed changes to the Social Security Act that would warrant accelerating Social Security retirement timing. This could, of course, change; however, you should make decisions based on facts rather than speculation.
Understanding The Difference Between Early Retirement And Full Retirement Age
If you retire before reaching full retirement age, your monthly benefit payment could be reduced by as much as 30% for the rest of your life. You read that correctly, but it’s worth repeating: Your monthly benefit payment could be reduced by 30% for the rest of your life.
To understand what happens when you retire early, begin by learning the meaning of “full retirement age.” It identifies the age at which a person can retire and receive 100% of their monthly retirement benefits.
The fact that Medicare coverage becomes available when you reach age 65 may confuse some people into thinking of 65 as the full retirement age. The full, or as the Social Security Administration calls it, normal retirement age, is 65 only for someone born in or before 1937.
Congress has from time to time amended the Social Security Act to delay the normal retirement age based on the year of a person’s birth. For example, a person born between 1943 and 1954 reaches normal retirement age at 66, but a person born in 1955 must wait until they are 66 years and 2 months old to retire with full benefits.
Anyone born in 1960 and later reaches normal retirement age at 67. The Social Security Administration website provides a chart to help you calculate your normal retirement age.
Early retirement is available at age 62, but your monthly benefit payments may be about 70% of what you could receive by waiting until your normal retirement age. The closer you are to your normal retirement age when you apply for early retirement, the less of a reduction you’ll have in your monthly benefits.
Social Security Disability Insurance Instead Of Early Retirement
The SSDI program allows a person with a disabling medical condition to receive monthly payments equivalent to their retirement benefits. You must be considered disabled and unable to work according to a definition used by the Social Security Administration to review claims for SSDI.
If approved for SSDI benefits, you get monthly payments equivalent to Social Security retirement at full retirement age. You also become eligible for Medicare coverage after receiving benefit payments for 24 months. This is an advantage over early retirement, where you must wait until age 65 to be eligible for Medicare. When you reach your full retirement age, the monthly SSDI payments automatically convert to Social Security retirement benefits without an early retirement reduction in monthly payments.
Applying for early retirement and SSDI may seem like a good idea because it provides a source of income, including early retirement benefits, while waiting for approval of the disability claim. It only works when the Social Security Administration determines the disability onset date as before the claim for early retirement benefits. If Social Security decides that your disability began after the early retirement claim, there will be a benefit reduction when you reach full retirement age.
Speak To an Experienced Social Security Disability Lawyer
Making decisions about managing your Social Security Administration benefits can be challenging. Help is available at Sackett and Associates, the disability professionals relied upon by people in Northern California and nationwide for more than 45 years. Learn more about your options during a free consultation by contacting Sackett Law today.
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