Nine out of ten people age 65 and older are receiving Social Security benefits. For 48% of married couples, and 71% of those unmarried, Social Security makes up more than 50% of their income. How and when to begin this income is one of the most important decisions many people make concerning retirement. Tens of thousands of people are making their decision every day, yet most of them do not know what their options are.

The Social Security office is well staffed with very trained and knowledgeable employees. The staff answers questions accurately; however, they are instructed not to give advice. Their job is not to advise, but to answer questions and implement decisions. If someone does not know the options, they will not ask about them, and will not be told about them. Learning and considering their options, is a brief, but essential phase of retirement planning. A wrong choice, unless it is corrected within a year, continues for life! If you decide to delay your benefits until after age 65, you should still apply for Medicare benefits within three months of your 65th birthday. If you wait longer, your Medicare medical insurance (Part B) and prescription drug coverage (Part D) may cost you more money.

Remember...

1. You can take benefits as early as 62(60 if widowed), but if you wait your monthly check increases until you reach age 70.
2. Consider all of your sources of income while making a decision on when to take your Social Security.
3. True Retirement: Are you actually retiring when you begin taking Social Security payments, or will you continue to work even part-time?
4. Divorced: Your benefit can be based on your ex-spouse’s work history.
5. Widowed: You can collect benefits based on your deceased’s spouse’s earnings.

What’s the best time to take your benefit?
The answer is that there’s no one “best age” for everyone and, ultimately, it’s your choice. The most important thing is to make an informed decision. Base your decision about when to apply for benefits on your individual and family circumstances. We hope the following information will help you understand how Social Security fits into your retirement decision.

Every Situation is Different
Would it be better for you to start getting benefits early with a smaller monthly amount for more years, or wait for a larger monthly payment over a shorter timeframe? The answer is personal and depends on several factors, such as your current cash needs, your current health, and family longevity. Also, consider if you plan to work in retirement and if you have other sources of retirement income. You must also study your future financial needs and obligations, and calculate your future Social Security benefit. We hope you’ll weigh all the facts carefully before making the crucial decision about when to begin receiving Social Security benefits. This decision affects the monthly benefit you will receive for the rest of your life, and may affect benefit protection for your survivors.

If you delay your monthly benefit, it will increase over time
Your full retirement age varies based on the year you were born. We calculate your basic Social Security benefit — the amount you would receive at your full retirement age — based on your lifetime earnings. However, the actual amount you receive each month depends on when you start receiving benefits. You can start your retirement benefit at any point from age 62 up until age 70, and your benefit will be higher the longer you delay starting it. This adjustment is usually permanent: it sets the base for the benefits you’ll get for the rest of your life. You’ll get annual cost-of-living adjustments and, depending on your work history, may receive higher benefits if you continue to work.

The following chart shows an example of how your monthly benefit increases if you delay when you start receiving benefits. Monthly Benefit Amounts Let’s say your full retirement age is 66 and your monthly benefit starting at that age is $1,000. If you start getting benefits at age 62, we’ll reduce your monthly benefit 25 percent to $750 to account for the longer time you receive benefits. This decrease is usually permanent.

If you choose to delay getting benefits until age 70, you would increase your monthly benefit to $1,320. This increase is the result of delayed retirement credits you earn for your decision to postpone receiving benefits past your full retirement age. The benefit at age 70 in this example is 76 percent more than the benefit you would receive each month if you start getting benefits at age 62 — a difference of $570 each month.

Retirement May Be Longer Than You Think
When thinking about retirement, be sure to plan for the long term. Many of us will live much longer than the “average” retiree, and most women live longer than men. More than one in three 65 year olds today will live to age 90, and more than one in seven will live to age 95. Social Security benefits, which last as long as you live, provide valuable protection against outliving savings and other sources of retirement income. Again, you’ll want to choose a retirement age based on your circumstances so you’ll have enough income when you need it.

Married Couples Have Two Lives to Plan for
Your spouse may be eligible for a benefit based on your work record, and it’s important to consider Social Security protection for widowed spouses. After all, married couples at age 65 today would typically have at least a 50-50 chance that one member of the couple will live beyond age 90. If you are the higher earner, and you delay starting your retirement benefit, it will result in higher monthly benefits for the rest of your life and higher survivor protection for your spouse, if you die first.

When you are receiving retirement benefits, your children can also be eligible for a benefit on your work record if they’re under age 18 or if they have a disability that began before age 22.

You Can Keep Working
When you reach your full retirement age, you can work and earn as much as you want and still get your full Social Security benefit payment. If you’re 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 doesn’t mean you must try to limit your earnings. If we withhold some of your benefits because you continue to work, we’ll pay you a higher monthly benefit when you reach your full retirement age. So, if you work and earn more than the exempt amount, it won’t, on average, decrease the total value of your lifetime benefits from Social Security — and can increase them.

Here is how this works: When you reach full retirement age, we’ll recalculate your benefit to give you credit for months you didn’t get a benefit because of your earnings. In addition, as long as you continue to work and receive benefits, we’ll check your record every year to see whether the extra earnings will increase your monthly benefit.

Sourced from: Social Security Administration

What is Medicare?
Medicare is our country’s health insurance program for people age 65 or older. People younger than age 65 with certain disabilities, or permanent kidney failure, or amyotrophic lateral sclerosis (Lou Gehrig’s disease), can also qualify for Medicare. The program helps with the cost of health care, but it doesn’t cover all medical expenses or the cost of most long-term care. You have choices for how you get Medicare coverage. If you choose to have original Medicare coverage, you can buy a Medicare supplement policy (called Medigap) from a private insurance company to cover some of the costs that Medicare does not. A portion of the payroll taxes paid by workers and their employers cover most Medicare expenses. Monthly premiums, usually deducted from Social Security checks also cover a portion of the costs. The Centers for Medicare & Medicaid Services is the agency in charge of the Medicare program. But, you apply for Medicare at Social Security, and we can give you general information about the Medicare program.

The Four Parts of Medicare
    Medicare Part A (hospital insurance) helps pay for inpatient care in a hospital or skilled nursing facility (following a hospital stay). Part A also pays for      some home health care, and hospice care.
    Medicare Part B (medical insurance) helps pay for services from doctors and other health care providers, outpatient care, home health care, durable medical equipment, and some preventive services.
    Medicare Part C (Medicare Advantage plans) are available in many areas. People with Medicare Parts A and B can choose to receive all their health care services through a private insurance company approved by Medicare to provide this coverage.
    Medicare Part D (Medicare prescription drug coverage) helps cover the cost of prescription drugs.

Who Can Get Medicare?
Medicare Part A (hospital insurance)
People age 65 or older, who are citizens or permanent residents of the United States, are eligible for Medicare Part A. You’re eligible for “Part A” at no cost at age 65 if:

    -You receive or are eligible to receive Social Security benefits; or
    -You receive or are eligible to receive railroad retirement benefits; or
    -Your spouse (living or deceased, including divorced spouses) receives or is eligible to receive Social Security or railroad retirement benefits; or
    -You or your spouse worked long enough in a government job through which you paid Medicare taxes; or
    -You are the dependent parent of a fully insured deceased child.

If you don’t meet these requirements, you may be able to get Medicare Part A by paying a monthly premium. Usually, you can purchase this coverage only during designated enrollment periods.

NOTE: Even though Social Security’s full retirement age is no longer 65, you should sign up for Medicare three months before your 65th birthday.

Before age 65, you are eligible for Medicare Part A at no cost if:

    -You’ve been entitled to Social Security disability benefits for 24 months; or
    -You receive a disability pension from the railroad retirement board and meet certain conditions; or
    -You receive Social Security disability benefits because you have Lou Gehrig’s disease (amyotrophic lateral sclerosis); or
    -You worked long enough in a government job through which you paid Medicare taxes, and you’ve been entitled to Social Security disability benefits for 24 months; or
    -You’re the child or widow(er) age 50 or older, including a divorced widow(er), of someone who’s worked long enough in a government job through which Medicare taxes were paid, and you meet the requirements of the Social Security disability program; or you have permanent kidney failure and you receive maintenance dialysis or a kidney transplant and you’re eligible for or receive monthly benefits under Social Security or the railroad retirement system; or you’ve worked long enough in a Medicare-covered government job; or you’re the child or spouse (including a divorced spouse) of a worker (living or deceased) who has worked long enough under Social Security or in a Medicare-covered government job.

Medicare Part B (medical insurance)
Anyone who’s eligible for Medicare Part A at no cost can enroll in Medicare Part B by paying a monthly premium. Some people with higher incomes will pay a higher monthly Part B premium.

If you’re not eligible for Part A at no cost, you can buy Part B, without having to buy Part A, if you’re age 65 or older and you’re:
1. A U.S. citizen; or
2. A lawfully admitted noncitizen, who has lived in the United States for at least five years. You can only sign up for Part B during designated enrollment periods. If you don’t enroll in Part B when you’re first eligible for it, you may have to pay a late enrollment penalty for as long as you have Part B coverage.

Medicare Part C (Medicare Advantage plans)
If you receive your Part A and Part B benefits directly from the government, you have original Medicare. If you receive your benefits from a Medicare Advantage organization or other company approved by Medicare, you have a Medicare Advantage plan. Many of these plans provide extra coverage and may lower your out-of-pocket costs.

If you have Medicare Parts A and B, you can join a Medicare Advantage plan. Private companies, approved by Medicare, offer Medicare Advantage plans. With these plans, you can’t have a Medigap policy, because Medicare Advantage plans cover many of the same benefits a Medigap policy covers. This includes benefits like extra days in the hospital after you’ve used days that Medicare covers. Medicare Advantage plans include:

    -Medicare managed-care plans;
    -Medicare preferred provider organization plans;
    -Medicare private fee-for-service plans; and
    -Medicare specialty plans.

If you decide to join a Medicare Advantage plan, you use the health card that you get from your Medicare Advantage plan provider for your health care. Also, you might have to pay a monthly premium for your Medicare Advantage plan because of the extra benefits it offers. You can enroll in a Medicare Advantage plan during your initial enrollment period, the first time you’re eligible for Medicare. You can also enroll during the annual Medicare open enrollment period from October 15 – December 7 each year. The effective date for the enrollment is January 1 of the upcoming year. There are also special enrollment periods for some situations.

Medicare Part D (Medicare prescription drug coverage)
Anyone who has Medicare Part A or Part B is eligible for Part D (Medicare prescription drug coverage). Joining a Medicare prescription drug plan is voluntary, and you pay an extra monthly premium for the coverage. Some beneficiaries with higher incomes will pay a higher monthly Part D premium.

If you don’t enroll in a Medicare drug plan when you’re first eligible, you may pay a late enrollment penalty if you join a plan later. You’ll have to pay this penalty for as long as you have Medicare prescription drug coverage. However, you won’t pay a penalty if you have Extra Help or another creditable prescription drug plan. To be creditable, the coverage must pay, on average, at least as much as Medicare’s standard prescription coverage. You can enroll during your initial enrollment period, the first time you’re eligible for Medicare. You can also enroll during the annual Medicare open enrollment period from October 15 – December 7 each year. The effective date for the enrollment is January 1 of the upcoming year. There are also special enrollment periods for some situations.

For more information on Medicare, click here to download the Medicare Publication.

Sourced from: Social Security Administration