Evans Wealth Management Blog

Articles written by Evans Wealth Management are designed to educate clients & potential clients on concepts important to their financial future.

6 Factors Anyone Out-of-Work and Over 62 Should Consider Regarding Social Security

To many who are out-of-work and over 62, claiming retirement seems like a viable solution to financial problems amid Covid-19. However, a rushed decision to do so may limit Social security benefits and sacrifice long-term goals for retirement and beyond. Here are six factors to consider when making this decision:

  1. Communicating with the Social Security Administration. Much of the process for applying for Social Security can be done online, despite the closing of the Social Security offices. The phone lines are open; however, there are long wait lines for the phone service and SSA workers may be calling from a private cell phone at home. Therefore, be careful of scammers. No SSA worker will ever make threats or demand payment.
  2. The Decision for the Higher Earning Spouse. The higher earning spouse is frequently advised to claim benefits at age 70 in order to maximize the income they will receive. A maximum earner who lives to age 85 would earn approximately $238,000 more in lifetime benefits waiting to age 70 as compared to claiming at age 62. However, this does not suggest the lower-earning spouse should not claim early. The early-claiming reductions to the benefit are not significant, and it may be a good strategy to combat current financial needs.
  3. The Earnings Test. The Earnings Test does not impact those who have lost their job, but those under the full retirement age who are working will lose $1 in benefits for every $2 of annual income made over $18,240. However, those who make less than $1,520 each month after starting benefits will receive no reduction in benefits.
  4. Going Back to Work. Those who are laid off and begin the application process are able to withdraw their Social Security application during the first 12 months if they go back to work. This would allow them to start the process over when reaching full retirement age to maximize benefits. However, another strategy would be to not withdraw the application and suspend benefits until full retirement age. This will allow you to build 8% in annual delayed credits to age 70.
  5. Primary Insurance Account (PIA). On the Social Security statement, the benefit amounts assume constant earnings until claiming age. A decrease in earnings from a job loss or other factor will cause one’s actual PIA to be lower than the PIA on the statement, causing a slight reduction in earnings.
  6. Medicare. Those over age 65 who receive Social Security are automatically enrolled in Medicare Part A. This may be beneficial during the pandemic as the first 60 days of hospitalization and a $1,408 deductible is covered. The downside is that one would be unable to contribute to a Health Savings Account (HSA). If you return to work where a HSA is in the health plan after enrolling in Social Security and Medicare Part A, they would need to disenroll from Medicare.
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