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Old 06-03-2015, 05:37 PM
 
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thank you much ilovemycat you are a great help!
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Old 06-12-2015, 09:39 PM
 
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Default not sure i understand??

My birthdate is June 5 1954. I will retire from teaching on June 30 2016. I planned on taking SS when I retire. Are you saying I should wait until Jan. 2017?
Thanks.









QUOTE=ilovemycat;39189188]Many people, when pondering when to begin to collect their Social Security benefits, usually think about the month they turn Full Retirement Age, or the month they turn 62, or possibly their birthday month, or their work anniversary month (35 years on a job), etc. as the month they are going to apply for their checks.

They contact SS 3 months before that month or apply on the internet a few months before their chosen date.

I want to explain how, if you know in advance when you would like to retire, how picking January of that year might yield you thousands or even tens of thousands of dollars in extra benefits.

Certain milestones, like the year you hit 62 or 62 +1, are cut and dry. Because you are not eligible before that age, you must wait for the birth date month.

Or, those who work and make hundreds of thousands a year, well, they have to wait for their FRA month, when the amount they earn no longer counts against receiving a SS benefits, because they make too much before that month.

But, for the vast majority of folks- even those who earn $100,000 in their FRA year, they have more possibilities.

Let's go through it with Sherry, a working, now single (previously divorced) woman.

Sherry is turning 66 in August, 2016, meaning she is born in 1950. She works and earns $85000.00 a year but hates her new boss and wants to retire at the end of 2016. She is worried about her debts. She knew that beginning in August, she can work and make as much as she likes and was planning to apply 3 months before her birthday and her FRA month, May, 2016.

But, in the year you reach Full Retirement Age (FRA), SS has a very liberal work test, meaning people can work and earn quite a bit of money and still receive benefits.

In that year, SS only cares about the earnings you made before the month you reach FRA. So, for Sherry, that means January through July. Let's see how much she made in those months: $85000 divided by 12 = $7083.00 per month. Times 7 months = $49,583.00.

Also, in 2015, a person reaching FRA can earn $41880. and still receive all their benefits. We don't know how much it will be in 2016, so let's use the 2015 limits, knowing 2016 will be even higher.

From Sherry's $49583.00 SS doesn't care about the first $41,880.00, so we subtract it. That leaves $7703.00. Then SS does not care about $1.00 for every $3.00 you earn over $41880.00 so we divide the $7703.00 by 3 to see how much SS does care about. That leaves $2567.00 that Sherry is over the SS work limit for 2016. So, from her original $85000.00, SS only cares about $2567.00!

Note that the $1 for $3 is only in the FRA year. If you want to do this pre-FRA, it is $1 for $2, and a much lower limit ($15720).

Ok, now, how much is Sherry's check? Well, (I used fictitious, but plausible amounts from Quick Calculator) in August, FRA month, her benefit is $1973.00. But, we are looking at January, 2016, when she is 7 months younger. Her check that month is reduced (initially, but not permanently) to $1896.00.

Remember, SS has to withhold $2567.00 from Sherry's checks for the year. The way they do that is withholding your check, month by month, starting with your filing month. In Sherry's case, that is January's check, $1896 and then February's check, $1896.00. In her case, they are done withholding by February and they actually withheld more than they had to. SS initially withheld $3792.00. They will even it up later. SS can now pay Sherry every check beginning with March, 2016.

That is March, April, May, June, July, @ $1896.00 which totals $9480.00. Of course Sherry will also get August to December, but she already knew that. (because she reached FRA in August and was allowed to work and earn as much as she wants and still get those months).

What happens next? When 2016 is over, SS evens up the record. When they know exactly what Sherry made pre-FRA, they either pay her the difference between the $3792 and the $2567 = $1225.00, if her estimate was spot on, or if she underestimated, they might have to withhold more. If she overestimated, they owe her more.

The next thing that happens is to her reduction month calculation. Remember, to get Sherry her $9480.00 (plus possibly another $1225 -totaling $10705.00) SS reduced her benefit by 7 reduction months, the 7 months she was under FRA in January.

But, Sherry didn't get 7 checks pre-FRA, she got March, April, May, June, July, = 5 months. So, they recalculate the reduction factor to only permanently reduce her benefits by the 5 full months she got checks. SS does not care about the partial month check Sherry received in February.

So, going back to Sherry's FRA amount of $1973.00, 5 retirement reduction months is $54.75, leaving a permanent SS benefit of $1918.00.

For a reduction of $54.75, Sherry gained $10705.00. We divide the loss into the gain to see how long it would take Sherry to make up that $10705.00. It takes Sherry 195 months or 16.2 years to make up that $10705.00 if she chose not to take it, or called SS in May, 2016 (3 months before her birthday) instead of January of that FRA year.

Sherry was thrilled and is going to use her "new found money" to pay off some (or all) of her debts and be well on her way to a more secure retirement. (or whatever-I am just presenting information).

I hope you find this helpful and informative. I know everyone and every circumstance is different, but knowledge is power![/quote]
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Old 06-12-2015, 09:44 PM
 
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My birthday is June 5 1954. I am retiring from teaching on June 30 2016 and hope to begin collecting SS when I retire. Are you suggesting that I start collecting in Jan. 2017?
Thankyou.
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Old 06-13-2015, 01:45 AM
 
71,588 posts, read 71,751,865 times
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january works best .
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Old 06-13-2015, 02:02 AM
 
Location: Cape Elizabeth
425 posts, read 387,495 times
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Quote:
Originally Posted by kejoslin View Post
My birthday is June 5 1954. I am retiring from teaching on June 30 2016 and hope to begin collecting SS when I retire. Are you suggesting that I start collecting in Jan. 2017?
Thankyou.
Not in your case. You are turning 62 so you can't start before July 2016 and starting the next January would have you missing out on 6 checks.

My example might have worked for you if you were working until age 63, 64,65 or 66, and you contacted SSA in the January before, not after!
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Old 06-13-2015, 02:45 AM
 
71,588 posts, read 71,751,865 times
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they still don't really know if not taking those checks is worth it or not. it all depends on their longevity. giving up those checks now can yield a big payback if they make it until 90 .

not only do they get the 6% prorated increase by waiting until january but they would lose the additional credit for that year they filed since they get calculated in january regardless.

it is really a toss up the same as delaying any amount of time up until 70 is. plus in this case they lose any credit from january to june of the year they filed by not waiting until january.

while you get calculated from the date you filed going forward , any add'l credits for time from january in the year you file is lost , in this case 6 month's of growth from january to june would never be recovered and lost. they would only get paid going forward for that time.

by filing the following january you capture all the past years credit as well as the higher payment for waiting and the cola's on the higher payment.

i am not so sure there are many cases it may not pay to wait the few extra months .
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Old 06-13-2015, 03:06 AM
 
Location: Cape Elizabeth
425 posts, read 387,495 times
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The point of my original post was to highlight how if you know when you are going to retire (and it is other than the month/year you are turning 62), it might yield tens of thousands of additional dollars to folks if they contact SSA in January of that year rather than 3 months before.

My example about Sherry, and how she was going to use this SS money (that she didn't know she could have) to pay down debts, is just one "real world example" that people need to factor in when making their decision about when to file for SSA.

My post #28, about Joe, Barbara and his son Ryan showed how using the January filing option (in his case he wanted to retire at age 65), yielded his family $9500.00 for a $37.00 a month reduction.
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Old 06-13-2015, 03:08 AM
 
71,588 posts, read 71,751,865 times
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but what eveyone has to keep in mind is any current year credits go out the window forever if you file before january . that money is gone and will never be recoverable.

giving up those few checks by waiting until january is not only recoverable but get increases and get cola's added too.

just something to think about. in the 6 months from january to june , if they file for checks in june instead of the following january , they will never be paid for the 6 months of increases .. they will only get credit starting in january going forward for those add'l 6 months.


my question is what do they mean by normal retirement age ? do you actually get paid up to the moment pre-fra ?

from ss website

Delayed retirement increases benefits

Delayed retirement credit is generally given for retirement after the normal retirement age. To receive full credit, you must be insured at your normal retirement age. No credit is given after age 69.

If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start benefits.
"


http://www.ssa.gov/oact/quickcalc/early_late.html

Last edited by mathjak107; 06-13-2015 at 03:46 AM..
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Old 06-13-2015, 06:02 AM
 
Location: Cape Elizabeth
425 posts, read 387,495 times
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Quote:
Originally Posted by mathjak107 View Post
but what eveyone has to keep in mind is any current year credits go out the window forever if you file before january . that money is gone and will never be recoverable.

giving up those few checks by waiting until january is not only recoverable but get increases and get cola's added too.

just something to think about. in the 6 months from january to june , if they file for checks in june instead of the following january , they will never be paid for the 6 months of increases .. they will only get credit starting in january going forward for those add'l 6 months.


my question is what do they mean by normal retirement age ? do you actually get paid up to the moment pre-fra ?

from ss website

Delayed retirement increases benefits

Delayed retirement credit is generally given for retirement after the normal retirement age. To receive full credit, you must be insured at your normal retirement age. No credit is given after age 69.

If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start benefits.
"


Early or Late Retirement
Delayed retirement credits only apply to months a person does not collect after their FRA and up until 70. So, that really does not factor in to my original post.

But, to your point, the last sentence from the SSA web site: If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start benefits."

I will explain: let's say your FRA is 66 and you are born September, 1954. You reach FRA in September, 2020 and you reach age 70 in September, 2024.

If in September, 2023 (age 69) you decide to file for your retirement, plus DRC's, you will receive your FRA amount plus 24%. If in September, 2024 (age 70) you decide to file for your retirement, plus DRC's, you will receive your FRA amount plus 32%.

It is just that SSA does not do the calculation until the following January, to ensure that you were due the exact number of DRC's for the prior year that you are claiming.

But everyone who waits a true 12 months after FRA gets an additional 8%, 24 months = 16%, 36 months = 24% and 48 months = 32%.

You can also get DRC's for less than 12 months- a person can have 1, 6, 18, 27 (examples).

I don't get your point about it being never recoverable. If SSA does a calculation a certain way: for instance, no one gets credit in the year of retirement for the earnings in the year of retirement- the earnings are figured in the following year and paid back to January of the following year- well, then, no one gets the credit.

So your $85000.00 you earn in 2016 is not used in the computation until January, 2017 and only affects benefits January, 2017 and forward - what does that mean for checks people received in 2016? It just means that everyone's checks in 2016 only reflect earnings through 2015, and everyone's benefit in 2017 reflects earnings through 2016, etc. etc.

Normal retirement age is a new phrase that they began using after I left SSA. i just noticed it on their website and mentioned it to my facebook SSA retiree group. Even the newer retiree's had not heard it. The way they use it - it is just a new acronym for Full Retirement Age. Why they changed the phrase? Don't know.
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Old 06-13-2015, 06:54 AM
 
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i do not believe those credits in the year you file are ever recovered for that pasat year. only piad out in new checks going forward..

you get recalculated in january but only get the rate reflecting going forward. no back pay is given for the months you lost credit on.

so if i was 66 in june 2015 and filed for june 2015 i would get whatever my rate was in january 2015 for june to dec.

my new rate would be calculated in january 2016 but that new rate that includes my january to june credits from the previous year would get paid out going forward. but you get nothing for jan to june 2015 paid back . you lose it.
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