Posts Tagged With: Retirement

Who Will Collect Your Social Security Retirement Benefits?

Women usually live longer than men. Many women will marry multiple times. These women may even become widows and multiple divorcees.

Because of the wonders of modern medicine people are living longer.Many Baby Boomers are discovering that at the end of their lives they have more time left over than money.

Many Americans do not have enough money saved to retire comfortably or at the same standard of living that they have enjoyed most of their lives.

If you are a woman and your last husband did not believe in life insurance; so, he did not leave you much in the way of life insurance benefits. Or, if your divorce settlements did not leave you with a substantial cash settlement or alimony for life, do not loose heart. You may not have to resign yourself to a life of poverty. There are some things you should know about Social Security Retirement Benefits.

There is a way that you can make the most of your Social Security Benefits. Just because you and your Ex-husband could not live together does not mean that he cannot be financially beneficial to you in your Golden Age.

Many people start collecting benefits at 62 years old. If you do, then you will be penalized for starting before your full retirement age or “normal” retirement age. According to the Social Security Administration (SSA), the normal age has been 65 for many years. However, beginning with people born in 1938 or later, that age gradually increases until it reaches 67 for people born after 1959.

Here is some interesting information about how you can cash in on your former spouse’s Social Security Retirement Benefits.  If you were married to someone at least 10 years and even if you are now divorced, you can still collect 50% of his benefits; and, your former spouse can collect 50% of your retirement benefits, if your retirement benefit is more than what he is entitled to receive. You need to be at least 62 years old, unmarried and are not entitled to a higher Social Security benefit on your own record.

Most men are the primary bread winners in their family. So, their Social Security Retirement Benefit amount will be larger than their wives or Ex-wives. When you apply for your retirement benefits, if your calculated benefit amount is less than you former spouse’s, you may elect to collect on his earnings record.

According to the Social Security Administration, you must be entitled to receive your own retirement or disability benefit. If you as a former spouse are eligible for a benefit, but you have not yet applied for it, you can still receive a benefit if you meet the eligibility requirements above and have been divorced from your former spouse for at least two years. Generally, the SSA cannot pay you benefits based on your Ex-spouse’s earnings record if you remarried someone other than the former spouse. If you get married again, if had better be to the same guy, or you loose you eligibility to collect on his earnings record.

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Take The Money $$$ And Run!

Take The Money $$ and Run!

by London Steverson on Wednesday, March 21, 2012 at 2:11pm ·

Monthly Social Security benefits claimed at age 62, rather than 65, are reduced by about 20 percent. The goal of the reduction is to ensure that early retirement does not result in any additional cost to the system. When the reduction was set over 50 years ago, a worker claiming at 62 received benefits for about 20 percent longer than someone claiming at 65. Since then, life expectancy has risen, so that claiming at 62 today means receiving benefits for only 15 percent longer. How can a 20-percent reduction still be right?

The original legislation creating the Social Security program did not allow workers to claim benefits before the program’s eligibility age of 65. In 1956, however, Congress gave women the option to retire as early as age 62 on a reduced monthly benefit, so that married women, who were typically younger, could retire and claim benefits at the same time as their husbands. Congress made the option available to all women, so as not to discriminate against unmarried women. Congress extended the same option to men in 1961, during a recession that made early retirement an attractive policy response.

In 1960 the average life expectancy at age 65 was about 15 years; therefore a worker who claimed at 62, as opposed to 65, collected benefits for three additional years or 20 percent longer (18 years /15 years). If an individual were receiving benefits for 20 percent longer, the only way to keep the cost constant would be to pay 20 percent less each year.

Life expectancy at 65 has increased significantly in the last 50 years. It is now 20 years,    so the worker who claimed at age 62 instead of age 65 would receive benefits for 15 percent longer (23 years/20 years). So why shouldn’t the benefits be reduced by 15 percent to keep costs constant?

The answer is that the cost to the government of providing benefits early is the difference in the present value of expected lifetime benefits starting at age 62 and at age 65. That calculation means that the cost depends on interest rates as well as life expectancy. Real interest rates have increased since 1960, and higher rates shrink the cost of a benefit stream claimed at 65 more than a benefit stream claimed at 62.

The rise in interest rates has largely offset the increase in life expectancy. Calculating the cost of lifetime benefits using the interest rate the Social Security Administration projects over the long-term, 2.9 percent, the cost of benefits claimed at 62 would be 96 percent of the cost of benefits claimed at 65. It suggests that the reduction for early retirement is a little high, but not bad.

In short, the actuarial reduction factor for early retirement, set by Congress over 50 years ago, has proved to be remarkably durable. Despite rising longevity and changes in interest rates, the cost of lifetime benefits claimed at 62 remains reasonably close to the cost of lifetime benefits claimed at 65

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