In 2012, the oldest baby boomers will turn 66, a very important age for Social Security eligibility. At 66, boomers can claim the full amount of Social Security they have earned, and the penalty for working and claiming Social Security benefits at the same time goes away. Here are some retirement preparation tips for those turning 66 next year.
Social Security eligibility.
People born in 1946 will hit what the Social Security Administration considers the full retirement age, at which time they are eligible to claim the full amount of Social Security they are entitled to. Boomers who claimed their Social Security early are receiving a reduced payout.
Wait and get more.
You can increase your monthly Social Security payments by even more if you wait to claim your benefits until the age of 70. If you are healthy, it makes sense that you wait until later to claim your benefits. You will receive more money per month and the money will continue at a higher rate for the rest of your life.
Claim twice.
Those who are married, or those who were married for at least 10 years, are eligible for Social Security payments based on their employment record or payments equal to up to 50 percent of the higher earner’s benefit. Baby boomers who are of full retirement age can even claim both of these types of payments at separate times. A 66-year-old retiree may sign up to get spousal payments and delay receiving his or her own retirement benefit. A retired worker who uses this approach between the ages of 66 and 70 will get higher monthly payments after age 70 due to waiting to claim plus four years of spousal payments.
Work without penalty.
If you work and claim Social Security payments at the same time before you reach age 66, part or all of your Social Security benefits will be withheld temporarily. Social Security recipients under age 66 who earn more than $14,640 in 2012 will have 50 cents of each dollar above that limit subtracted from their Social Security payments. The year you turn 66, the earnings limit changes to $38,880 and the amount withheld is reduced to 33 cents for each dollar earned. The earnings limit disappears once you turn age 66.
Remember Medicare.
Individuals born in 1946 should have signed up for Medicare in 2011. Retirees can sign up for Medicare starting three months prior to the month they turn 65. It’s imperative to sign up for Medicare as soon as you are eligible because premiums could rise by 10 percent for each 12-month period that you wait to enroll. People who are still working and are covered by a group health insurance plan through their job must sign up within eight months of leaving the job to evade the penalty.
