Social Security Changes
There are some changes in social security in 2021. First change is the payroll tax gap. Payroll text gap is going to go from 137.700 dollar to 142.800 dollar. It means if you are fortunate enough to earn over 142.000 dollar, you are going to be paying 5.000$ more. You need 40 credits to qualify for social security. Each credit is equal to one quarter of working. It means you need 10 years over a 30-year period for being qualified.
The threshold has gone from $1410 per quarter to $1470 per quarter which means $5580 per year. If you plan to retire and file for Social Security before you reach your retirement age you need to understand the social Security process and the earnings limit. There are certain periods where it is your monthly earnings that are counted, and these earnings change every year.
Social Security Earnings Limits Climb
If people who get Social Security benefits continue to work, they will be able to earn $720 more in 2021. Younger Social Security beneficials can earn up to $18,960 in 2021. In this pandemic year if you turn your retirement age, the earning limit climbs to $50,520. It is approximately $2000 more than 2020. The penalty is $1 withheld for every $3 in earning. There is no penalty for collecting Social Security and working for people who turned their full retirement age. They will recalculate your benefits to give you credits for your continued earnings.
Some Strategies to Maximize Benefits
Most people know that the first thing is to wait. You have to wait till your full retirement age or even beyond that. If you wait longer, your payment will be higher. The next thing is understanding Social Security takes your best 30-35 years of working history. They are going to take the earnings when you were new in the work life, adjust them to today’s current dollars. After that they add that and all other earnings up until today as your base to use as a calculation of benefits. Therefore, if you want to increase your Social Security payment, you need to move your 30 best periods forward.
There is a valuable claiming strategy available for married couples that can maximize a couple’s lifetime benefits. If you are married to a husband who has Social Security benefits and, but you never work outside the home, you are entitled to a spousal benefit because you are married to him.
If the couple had been married at least ten years, divorced and currently single and you turn your full retirement age this year, you can let your Social Security retirement benefit keep growing by %8 a year and you can get just a spouse on your ex’s earnings. You do not have to talk with him about this. The Social Security Administration does it all. They are going to check your birth year and date of your wedding until the date of your divorce decree. It is just depending on your age.
After you begin to collect checks your Social Security payments are set in stone. Workers who retire after turning 62 reduce their lifetime benefits. If it is possible for you, you can delay your retirement until 70. It will increase your total benefits. Do not forget that retirement does not mean that you must stop working. It means you begin to claim your benefits. Even delaying it just for 1 year will make a huge difference in the size of your monthly checks.
Now, this is not only an option for workers. If you need money or you and your partner are ready to get money. You can start collecting benefits earlier. But if you have a chance and time to wait, it is worth waiting.