The biggest takeaway from the Aug. 1 Social Security workshop is that every person’s situation is unique.
There’s no one-size-fits-all advice on whether to take early retirement at 62, or continue working until you reach full retirement age (between 66 and 67 years depending upon birth year), said Jack Burns, the Social Security Administration’s Southwest area public affairs specialist.
Burns drove to Payson from Phoenix to give an overview of how Social Security works, and answer questions from the audience.
The event was held at Payson Public Library, and attracted an estimated 70 people. Many had questions and Burns encouraged them to contact him or another representative at the Social Security Administration after the talk for an in-depth review of their eligibility.
Burns explained all the ways the SSA is available for one-on-one consultations and the wealth of information, calculators and forms available through the SSA website www.ssa.gov.
There is no Social Security office in Rim Country — the closest offices are more than 80 miles away in Globe, Mesa, and north Phoenix. Seniors can book an appointment at an office online. If calling, you can schedule a time for a representative to call instead of waiting on hold, Burns said.
“The first step,” said Burns, “is to sign up for a My Social Security account on the www.ssa.gov website.”
Burns reported that in 2019, nearly 64 million Americans will receive approximately $1 trillion in Social Security benefits.
Despite being originally intended to provide only 40 percent of a person’s retirement income, Burns reported that among Social Security beneficiaries, 48 percent of married couples and 69 percent of unmarried persons receive 50 percent or more of their income from Social Security.
Among Social Security beneficiaries, 21 percent of married couples and about 44 percent of unmarried persons rely on Social Security for 90 percent or more of their income.
Burns also said that 36 percent of workers report that they and/or their spouse have no savings set aside specifically for retirement.
The Future of Social Security
Social Security Administration statistics on increased life expectancy indicate that a man can expect to live, on average, until 84.3. A woman turning 65 today can expect to live, on average, until age 86.6. One in four people turning 65 today will live past age 90, and one out of 10 will live past age 95.
This increased life expectancy, coupled with the reduced ratio of workers versus Social Security retirement recipients, raises questions about the long-term solvency of the program.
The two Social Security trust funds — Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) will be able to pay all benefits in full and on time until 2036, he said.
Contrary to popular belief, Burns said 2035 is not when Social Security will cease. The funds reached the brink of asset reserve depletion in the past, but Congress made substantial modifications to avoid this.
If no further action is taken, 2035 will mark the year when benefits may be reduced as much as 20 percent.
The website www.ssa.gov offers tools to calculate future benefits including a Benefits Planner.
How Social Security Benefits are Determined
Benefits are based on Social Security taxable work earnings.
1) Wages are adjusted for changes in wage levels over time.
2) The monthly average of the 35 highest earning years.
3) Result is “average indexed monthly earnings.
A person needs to have a minimum of 10 years of taxable work earnings to qualify for Social Security retirement payments.
What is the best age to retire?
Burns used a baseline benefit of $1,000 a month based on a person at full retirement age of 66.
The earliest year to retire and receive benefits is age 62, the full retirement age depends upon the person’s date of birth.
If born between 1943-1954, the full retirement age is 66.
A $1,000 retirement benefit taken at age 62 would be reduced by 25 percent
If born in 1955, the full retirement age is 66 and 2 months
A $1,000 retirement benefit taken at age 62 would be reduced by 25.83 percent
If born in 1957, the full retirement age is 66 and 6 months
A $1,000 retirement benefit taken at age 62 would be reduced by 27.5 percent
If born in 1958, the full retirement age is 66 and 8 months
A $1,000 retirement benefit taken at age 62 would be reduced by 28.33 percent
If born in 1959, the full retirement age is 66 and 10 months
A $1,000 retirement benefit taken at age 62 would be reduced by 29.7 percent
If born in 1960 or later, the full retirement age is 67
A $1,000 retirement benefit taken at age 62 would be reduced by 30 percent
The reduction in retirement benefits affect a person’s lifetime benefit income.
Working While Receiving Benefits
If under the full retirement age, a person is restricted to earning up to $17,640 a year. Above that, $1 of every $2 benefits will be withheld.
If the person has reached full retirement age, they are restricted to earning up to $46,920 a year before the month of full retirement age. Above that amount, $1 of every $3 benefits will be withheld.
Once the person reaches the month of full retirement age and above there is no limit to earnings and no withholding of Social Security benefits.
Earnings are calculated from gross wages from employment and/or net earnings from self employment.
Burns thanked everyone for “an extremely successful event,” and said he plans on coming back to Payson.