Social Security benefits are based on your highest 35 years of earnings, adjusted for inflation. The formula averages your top earning years to calculate your Average Indexed Monthly Earnings (AIME). If you don’t have 35 years of income, the Social Security Administration fills the missing years with zeros—which significantly drags down your benefit amount. This is where many people unknowingly leave money on the table.

For example, let’s say you worked for 30 years earning an average of $60,000 per year, but you have five missing years. Those zeros reduce your benefit. But if you work just five more years—even part-time at $30,000 per year—you replace those zeros and could increase your monthly benefit by $200 or more. Over a 30-year retirement, that adds up to an additional $83,000 in income.

Even modest earnings can make a big difference. A part-time job bringing in $30,000 for five years could bump your benefit by about $115 per month. That’s over $41,000 in additional retirement income. And remember, your Social Security benefit is adjusted annually for inflation. So the higher your base benefit, the more you gain from those yearly cost-of-living increases.

Timing your claim also plays a big role. If you claim at age 62, you might lock in a lower benefit—say $1,400 a month. But wait until full retirement age, and it could jump to $2,000. Hold off until age 70, and you’re looking at $2,500 or more. Delaying also means your cost-of-living adjustments compound on a larger base.

What’s especially interesting is how the Social Security formula benefits different income levels. It’s progressive, which means it replaces a higher percentage of income for low earners. Middle-income workers actually see the biggest bump from replacing zeros—up to an 11% increase or $228 more per month. Even low-income workers can gain an 8% increase by filling in missing years.

Don’t forget: maximizing your own benefit helps your spouse too. A higher primary benefit increases both spousal and survivor benefits. So by boosting your benefit, you’re also securing more income for your partner, which can be crucial if they outlive you.

And there’s good news if you’ve already started collecting Social Security. The administration recalculates benefits every year. So if you continue working and replace a zero or a low-earning year, your benefit can still go up—even after you’ve started receiving checks.

The takeaway? Whether you’re a few years from retirement or already collecting benefits, it’s worth reviewing your earnings record. Consider working a few extra years, even part-time, to replace zeros and increase your lifetime income. A little effort now can pay off for decades to come.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.

The post How Replacing Zero-Income Years Can Boost Your Social Security Benefits appeared first on ROI TV.

Let’s walk through the most important factors to help you decide what’s best for your retirement health and income strategy.

When It Makes Sense to Start Both at 65

If you’re fully retired at 65—meaning you’re not earning any wages, 1099 income, commissions, or W-2 income—it might make sense to start both Medicare and Social Security at the same time. In this case, you’re no longer subject to the Social Security earnings test, which limits how much you can earn without seeing your benefits reduced.

For example, if you start Social Security before your full retirement age (which is 67 if you were born in 1960 or later), you can only earn up to $23,400 per year before penalties kick in. For every $2 you earn above that, $1 gets deducted from your Social Security check. So if you’re still working, it might be smarter to wait.

Then there’s the break-even point. If you take Social Security early at 65, it’ll take until about age 82 before your total lifetime benefits catch up to what you would have received by waiting. If you expect to live well into your 80s, waiting could give you higher monthly income over time.

Don’t forget spousal benefits. A spouse can receive up to 50% of the other spouse’s full retirement age benefit—but only if the primary spouse has already filed. Coordinating your filing strategy is key to maximizing what you both receive.

How Early Filing Affects Your Budget

Social Security benefits are reduced if you take them early. Starting at 65 instead of 67 results in a 12% reduction. If you start at 62, the reduction jumps to about 30%.

Let’s look at some quick numbers:

• A $2,000 monthly benefit becomes $1,760 if taken at 65
• A $2,500 benefit becomes $2,200

If you need the money to make your budget work, early filing might be necessary. But if you can hold off, delaying could lead to a more secure retirement.

When You Might Delay Medicare but Not Social Security

Some people have excellent employer-provided group health plans (usually from companies with 20 or more employees). If that’s you, you may want to take Social Security at 65 but delay Medicare Part B.

Medicare Part A is automatic once you sign up for Social Security, but you can opt out of Part B by returning your Medicare card or submitting CMS Form 1763. As long as your employer coverage is credible and continuous, you won’t face penalties for enrolling in Part B later through a Special Enrollment Period.

When You Need to Take Medicare at 65

Certain groups are required to sign up for Medicare at age 65, regardless of whether they’re taking Social Security. These include:

• Those without employer coverage
• Anyone on COBRA
• Retired military personnel with Tricare for Life
• Employees of small companies with 19 or fewer workers
• Individuals using Affordable Care Act (ACA) marketplace plans

COBRA and Tricare shift to secondary payer status once Medicare becomes available, meaning Medicare Part B is necessary to maintain full coverage. ACA plans lose their financial incentives at age 65, making Medicare the better option.

When It Makes Sense to Delay Medicare

If you have a strong group health plan through an employer with 20+ employees and you’re still contributing to a Health Savings Account (HSA), you’ll want to avoid enrolling in any part of Medicare.

Enrolling in Medicare Part A disqualifies you from making HSA contributions, so even if Part A is premium-free, it’s better to delay enrollment entirely if the HSA is part of your financial strategy.

Just be aware: Medicare Part A only carries penalties for those who don’t have enough work history—specifically fewer than 40 quarters of employment. If you’ve met that mark, there’s no penalty for enrolling later.

Comparing Medicare with Employer Coverage

Let’s say you have employer coverage but it’s not great—maybe the premiums are high or the coverage is weak. In that case, it’s worth comparing the total out-of-pocket costs and benefits of staying with your employer’s plan versus switching to Medicare.

Medicare often provides stronger coverage and may be less expensive, especially when paired with a good Medicare Supplement or Advantage plan.

Spousal Benefits and Filing Strategies

Spouses can qualify for Social Security benefits based on their partner’s work record, but a few rules apply. You must be married for at least one year, and the primary spouse must already be receiving benefits.

The old strategy of filing and suspending to trigger spousal benefits no longer works under current rules. So, timing your filings together is essential to make sure both partners get the most out of their benefits.

The Bottom Line

There’s no one-size-fits-all answer. Whether you start Medicare and Social Security at the same time or stagger your enrollment depends on your income, employment status, health coverage, and retirement goals.

Our recommendation? Take a close look at your total financial picture. What’s your budget? Are you still working? Do you have a spouse to coordinate with? These answers can make or break your retirement strategy.

The post Huge Retirement Decision: When to Start Social Security and Medicare appeared first on ROI TV.

1. Introduction to Survivor Benefits

Social Security provides survivor benefits to eligible family members of deceased workers, offering financial assistance during a difficult period. These benefits can be vital in maintaining financial stability after the loss of a loved one.

2. Eligibility for Survivor Benefits

To qualify for survivor benefits as a widow or widower:

• Marriage Duration: You must have been married to the deceased for at least nine months at the time of their death. troweprice.com
• Remarriage Considerations: Remarrying before age 60 generally disqualifies you from receiving survivor benefits. However, if the subsequent marriage ends, you may become eligible again. Remarrying after age 60 does not affect your eligibility. massmutual.com
• Ex-Spouse Eligibility: If you are divorced, you can receive survivor benefits if the marriage lasted at least 10 years. newyorklife.com

3. Claiming Survivor Benefits

The age at which you claim survivor benefits affects the amount you receive:

• Early Claiming: You can begin receiving survivor benefits as early as age 60 (or 50 if you are disabled). However, claiming before your full retirement age (FRA) results in a reduced benefit. troweprice.com
• Full Retirement Age: Waiting until your FRA allows you to receive 100% of the deceased spouse’s benefit. The FRA varies depending on your birth year.

4. Impact of Earnings on Survivor Benefits

If you work while receiving survivor benefits before reaching your FRA, your benefits may be reduced based on your earnings:

• Earnings Limit: In 2024, earning more than $22,320 will result in a $1 reduction in benefits for every $2 earned above this threshold. These limits are adjusted annually for inflation.

5. Strategic Planning for Survivor Benefits

To maximize your benefits:

• Switching Benefits: You may choose to claim survivor benefits first and delay your own Social Security retirement benefits, allowing them to grow due to delayed retirement credits. Alternatively, if your own benefit is higher, you might claim it first and switch to survivor benefits later. smartasset.com

6. Example Scenarios

• Scenario 1: A widow, age 60, opts to claim reduced survivor benefits immediately and plans to switch to her own higher retirement benefit at age 70.
• Scenario 2: A surviving spouse with a lower personal benefit claims their own benefit early and switches to a higher survivor benefit upon reaching FRA.

7. Special Considerations

• Primary Income Earner: If the deceased spouse was the primary earner, the survivor might not have a higher personal benefit to switch to, making the timing of claiming survivor benefits crucial.
• Deceased’s Claiming Age: The age at which the deceased spouse claimed their benefits can affect the survivor benefit amount. Delayed claiming by the deceased can result in higher benefits for the survivor.

8. Marriage and Remarriage Rules

• Remarriage Before Age 60: Generally disqualifies you from receiving survivor benefits unless the subsequent marriage ends.
• Remarriage After Age 60: Does not affect your eligibility for survivor benefits. massmutual.com

9. Conclusion

Understanding and strategically planning for Social Security survivor benefits can provide essential financial support after the loss of a spouse. It’s important to assess your personal circumstances and consider consulting with a financial advisor to make informed decisions that align with your financial goals.

For more detailed information, refer to the Social Security Administration’s official guidelines on survivor benefits.

ssa.gov

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.

The post Understanding Social Security Survivor Benefits appeared first on ROI TV.