It should be clear to every working person that you do not receive full social security benefits until you are at the age of 67 (if you are born after 1960 – it is 66 and ‘x’ amount of months if you are born prior to 1960 so please look it up to know your where you land on the table). However, a person can retire at the age of 62 to begin receiving the benefits. Unfortunately, there is a catch – you lose up to 30% of you benefits (25%, as the video states, is only true if you were born between the years 1943-1954).
So how does the government decide your entitlement?
They begin by calculating your Average Indexed Monthly Earnings (AIME) – they arrive at this number by figuring out each of your annual incomes and adjust it for inflation. They then obtain the average salary by using income from the 35 highest grossing years; this number will be used as a baseline to figure out your actual amount. Unfortunately, you do not get this amount but only a fraction.
Three important things should be taken into consideration:
- You get 90% of the first $826 of your AIME.
- You get 32% of your AIM for earnings between $826-$4980.
- You get 15% on any amount above $4980.
The video does a great job of explaining the process!
It is fairly clear that the trick to receiving the most out of your SS is by delaying retirement as much as possible – if anything, we hope this encourages you to live a healthy lifestyle!