Your 2019 Guide to Social Security Benefits – The Motley Fool

Social security is an important source of income for millions of US pensioners, as it accounts for more than half of all income for the majority of retired households.

Unfortunately, social security is not understood by many Americans. And by fully understanding the social security program, you will be in a better position to maximize your benefits and make smart financial decisions for you and your family. With that in mind, if you are already collecting social security benefits, approaching retirement age, or still in the middle of your career, it is a comprehensive guide to social security schemes in 2019.

Image Source: Getty Images.

Who is eligible for social security benefits?

In order to qualify for retirement benefits, you must earn 40 quarter of coverage, also known as "Social Security" credits. "

How this works: In 201[ads1]9, you can earn a credit by earning $ 1,360 in social security, taxable income. This amount is adjusted annually to keep up with inflation. In a given calendar year you can earn up to four credit points. To make a long story short, in order to qualify for retirement benefits based on your own work record, you usually earn the $ 5,440 2019 value for at least 10 calendar years.

How do you calculate retirement benefits?

If you qualify for pension benefits based on your work, it is an overview of how Social Security Administration (SSA) will determine your monthly social security.

Firstly, SSA maintains an overview of all your annual earnings throughout your career up to each year's payroll tax, which is the maximum amount of labor income that is subject to the social security income tax. For 2019, the payroll tax is $ 132 900, so d Ette is the maximum amount of work income from 2019 that will be considered when you determine your retirement benefit.

Each year's income value is then indexed for inflation. Then, the inflation-adjusted income is added from the 35 highest earnest years and divided by 420 – the number of months for 35 years – to produce average indexed monthly earnings, or AIME. If you have less than 35 years of employment, zeroes will fill out for the missing years.

Your AIME will then be linked to a formula to determine your primary insurance amount, or PIA – the first monthly social security allowance you are entitled to collect in your full retirement age (more than below).

For 2019, social security benefits are as follows:

• 90% of the first $ 926 of AIME plus [19659015] 32% of the amount of AIME greater than $ 926, but less than $ 5,583, plus .. .
• 15% of the amount of AIME greater than $ 5,583

A couple of important notes on this formula. Firstly, the percentage remains the same from year to year, but the two AIME thresholds (known as bend points) are adjusted annually.

The other note is why this is important to know. Your primary insurance amount is calculated based on any performance formula in force during the calendar year where you become 62, no matter when you require benefits . In other words, if you become 62 in 2019, but do not choose to start collecting social security until 2025, SSA will still use the 2019 formula. In order to be ready, all revenue after 2019 can still be included, and your PIA will be adjusted with any adjustments for the lifetime that happens between now and then. If you were 62 in a previous year, you can find a list of historical bend points on the SSA website.

How to calculate your original retirement benefit, but only if you choose to start receiving benefits to full retirement age. Since most Americans start social security before or after their full retirement age, let's look at what the term "full retirement age" means in terms of social security schemes and what it means to you.

What is your Social Security full retirement age?

US workers who are not yet entitled to social security have a full retirement age from 66 to 67 years, depending on when they were born. Here you will find a quick guide to help find your:

Data source: SSA.

When can you claim benefits?

Even if you have a specific full retirement age, US workers who qualify for social security benefits may choose to claim them at any time between 62 and 70 years. Well, technically you can wait for as long as you want, but there's no need to wait over 70 years, as we are about to see.

If you choose to claim benefits before reaching full retirement age, your monthly benefit will be permanently reduced. On the other hand, if you choose to wait until after your full retirement to begin collecting social security, your monthly benefit will be permanently increased.

To be a little more specific, here are the three rules SSA uses in combination with your calculated primary insurance amount to determine your original social security benefits:

• If you require social security benefits before reaching full retirement age, but within 36 months, your advantage will be reduced by approx. 6.67% per annum (about 0.56% per month) You claim early, for up to 36 months before your full retirement age.
• If you claim insurance benefits more than 36 months before reaching full retirement age, your benefit will be reduced by 20% plus an additional 5% for each year (approximately 0.42% per month) beyond 36 months before full retirement , until as early as 62 years.
• If you require social security benefits after full retirement, your benefit will be increased by 8% for each year, choosing to wait beyond FRA (about 0.67% per month). However, the increase stops after turning 70, so there is no need to wait longer than that.

How much does average retirement earn from Social Security?

SSA estimates that the average retired employee will benefit from $ 1,461 in January 2019 after next year's 2.8% living standard adjustment is applied.

However, it is important to emphasize that the benefits of social security benefits vary considerably from how much recipients earn throughout their career and when they choose to archive. Some retirees receive far less than average, while others get much more.

On this note, the maximum benefit payable to any retirement at full retirement in 2019 will be $ 2,861 per month. Of course, this may be even greater for high earners who choose to delay to claim their benefit. Someone entitled to this full retirement benefit in 2019 will receive $ 3,770 a month if they waited for 70 years – in addition to any life-time adjustments that occur in the meantime.

Social Security

Many Americans do not understand that there are much more benefits to pensioners than just monthly benefits for retirees. Married people who have not worked or who have earned much less than their spouse can qualify for retirement income through spousal benefits.

There is much more to spousal benefits than can be explained in just a few paragraphs, but the short version is that if a spouse's primary insurance amount is less than half of the other spouse, a spousal benefit may kick in to make it half of the higher employer's benefit.

As a quick example, let's say you are entitled to a $ 1800 per month full retirement benefit, but your spouse was primarily a grandparent and does not qualify for a social security contribution based on his / her own assignment. In this case, a spousal benefit may give them $ 900 in monthly pension income if they began to accumulate in full retirement age.

As with benefits for retirees, benefit benefits for social security will be reduced permanently if the claim before the recipient achieves full retirement age (regardless of the age of the employee whose record is considered). An important difference, however, is that the reduction rates are slightly different for spousal benefits. In particular, spousal benefits will be reduced to early advocates based on these two rules:

• A spousal benefit is reduced by 25/36 of 1% per month for each month before the normal retirement age, up to 36 months.
• A spousal advantage is further reduced by 5/12 of 1% per month over 36 months. This part of the reduction formula is the same as for regular social benefits, and as with regular benefits, the earliest spouse benefit can be claimed is 62 years.

A condition for receiving a spousal advantage is that the primary waiter must have claimed his own benefit and may collect it at the moment. So, even if you reach a full retirement age, you can not accumulate an advantage based on your spouse's work records until they begin to retire.

Can you collect social security benefits when you work?

The short answer is yes. You are free to claim social security at any time after you have reached the age of 62, regardless of your employment status. However, if you have not reached the full retirement age, some or all of your benefits will be withheld if your earnings exceed a certain threshold.

This is called income calculation for social security, and it efficiently groups employee recipients into three categories:

1. Those who want to achieve full retirement after 2019. The most restrictive form of income test applies to this group. A dollar in benefits will be deducted for every $ 2 earned over the current limit.
2. Those who want to achieve full retirement age in 2019. This group is subject to a much looser earnings test, and only in the months before the month where they will achieve full retirement age. For this group, one dollar benefits will be held back for every $ 3 earned over a much higher threshold than the first group.
3. Those who have already reached full retirement age. Recipients in this group are not subject to income calculation for social security. They can free up all their social security contributions regardless of how much they earn from working.

For 2019, Income Test Limits:

Data source: SSA.

Will your social security plans increase every year?

Each year, SSA considers inflation data and increases insurance for existing receivers accordingly. In particular, SSA compares the year's change in the consumer price index for urban workers (KPI-W). As this inflation index rises, the benefits increase with the same amount for all recipients of social security schemes beginning with the January payment.

For 2019, this cost-benefit adjustment or COLA is 2.8%.

It is also worth mentioning that if there is no inflation in a given year, no COLA will be given. And if there is a decline in CPI-W (ie deflation), social security benefits will not go down; They will simply remain the same.

If You Die, Your Survivors Can Get Security Money

Another program of security not understood by many Americans is surviving benefits. That is, if you die, some surviving members of the family may collect benefits based on your work assignment. You can read a Leader Benefit Guide for more information, but here's an overview of how much money certain survivors can get, expressed as a percentage of your benefit.

Data Source: Social Security Administration (SSA).

Insurance Social Security

Social Security also provides benefits to disabled workers through a program called Social Security Disability Insurance, or SSDI. If SSA has determined that you have qualifying disability and that you have worked enough to qualify for benefits, you may receive monthly income for social security under this program.

Specifically, there are two tests that a disabled person must pass:

• The first is known as the "last work test." This test tells you how much you must have worked in the years before your disability, depending on the age where you were disabled.
• The other is called the "Duration of Work Test", which tells you how much you must have worked completely to qualify for disability benefits.

You can get an estimate of your hypothetical disability pension by reviewing your latest social security statement, which I will discuss later in this article.

Social Security for Children

So far, we have discussed pension benefits, social security benefits, survivors and disability benefits. One of the other components of the Social Security program is benefits for children of retired workers.

Qualifying children can earn as much as 50% of a retired employee's monthly retirement benefit. So if you're entitled to a $ 1,500 security per month and have a qualifying child, they can earn up to $ 750 per month while continuing to collect your monthly full winnings.

To qualify for benefits, children must be unmarried and must fit into one of these three categories:

• Under 18 years
• No older than 19 and continued to enroll in upper secondary school school
• Disabled and any age whose disability began before the child's 22th birthday

Note that this is a relatively unusual form of social security. After all, most people who are 62 years and older do not have small children. Of the latest available data, about 673,000 of all persons with social security benefits are children of retirees – it is approximately 1% of the total amount.

The Family Maximum Social Security

Between your own retirement benefits, spouses, children's benefits, disability loss and surviving benefits, there are many scenarios where more people can simultaneously draw a social security contribution based on your work.

For example, if you retire and benefit from $ 2,000 per month at full retirement age and you have a spouse who has never worked, they can also deduct as much as $ 1000 per month. And if you have a 14-year-old child, they will also be entitled to a benefit of $ 1000 based on rules for child benefits.

In such situations, SSA limits the overall benefits that can be deducted from an individual's work record. The formula for determining this limit is somewhat complex, but the short version is that the total benefits to be paid on your record at any given time can not exceed 150% -180% of your full pension benefit.

In the event that the total calculated benefits exceed the allowable amount, benefits for other than the retired worker (as survivors) will be reduced proportionally.

How to Apply for Social Security in 2019

There are three ways to apply for social security benefits at – – the Internet, personally at your nearest social security number, and by telephone.

The online application process at www.ssa.gov is by far the easiest and fastest method. The application should take about 15 minutes, and generally no further documentation is required.

The phone is the next easiest way, so if you're not comfortable with the online application process, it's a good option. Finally, it might be a good option to apply for a person if you want someone to go through the process, but it's definitely not the fastest method. If you decide to apply personally, SSA recommends that you make an appointment first, as waiting times may be quite long.

What if you give meaning when applying for social security?

If you apply for social security benefits and regret your decision later, there are two scenarios where you can get an overtaking.

First, if you started collecting benefits within the last 12 months, you have the opportunity to withdraw the social security application and make it as if you had never used it at all. The big disadvantage of doing this is that you must return any benefits you have already received – and if it has been almost a year since your application date, this could be a significant amount of money.

The second potential acquisition is only possible if you have already reached full retirement age. If you have already reached full retirement age, no matter how long you have accumulated benefits, you have the opportunity to suspend your benefits for a later date.

If you do this you do not have to pay back any benefits and you will collect late retirement credits until you choose to recover your benefits or until you reach 70 years, then your benefit will start automatically again.

Social Security Declaration Is A Valuable Tool

If you do not collect social security yet and want a good ballpark estimate of what your future retirement benefit might be, the best place to get it (except to make a long calculation for hand) is on your annual insurance scheme.

You can access the latest Social Security Statement at www.ssa.gov. You must create a free mySocialSecurity account if you have not already.

It's a smart idea to check your statements regularly. In addition to your estimated benefit, you may find other valuable information such as:

• The possible effects of early or late retirement on your benefits.
• Your complete post. Be sure to check this for accuracy, as the revenue record contains errors more often than you might think.
• Qualification of Medicare benefits.
• How much you can get if you were disabled.
• How much your survivors can receive if you should pass by.

Will social security be around for my entire pension?

To be completely clear, it is not possible to predict 100% accuracy what social security will look like in the future. There are only too many ways the program can be changed by the Congress over the years. That said, here is what we know from now.

Social security ended in 2017 with almost $ 3 trillion in reserves, and in fact a modest surplus went on for the year. However, the program is expected to start running with a deficit in 2018 and that the deficit will increase over the next decades. Because of this, social security will penetrate into its reserves to pay benefits and nearly $ 3 trillion stocks will be depleted in 2034, according to current forecasts.

If this were to happen, social security payroll tax would still be enough to fund 77% of the promised benefits, so a total reduction of 23% would be required at that time.

However, the story tells us that something will be done before then. And almost nobody on both sides of the political spectrum talks about cutting or drastically changing social security for anyone who is near retirement now. So, despite the headlines you may have read about Social Security, "goes well," social security will still be around when you are decades of retirement – even if you are young now.