Requirement, Benefits, Timing and Medicare Enrollment
Medicare is generally available for most people once they turn 65, but Social Security benefits no longer automatically correspond to the same milestone. Your benefits are determined by your lifetime earnings. Your full retirement age, or FRA, is the age when you are entitled to 100 percent of your Social Security benefits. If you were born between 1943 and 1954, your full retirement age is 66. If you were born in 1955, it is 66 and 2 months. For those born between 1956 and 1959, it gradually increases, and for those born in 1960 or later, it is 67. The earnings limit only applies if you are under full retirement age. Social Security does not withhold any money from your benefits if you keep working after FRA.
Medicare and Social Security – An Important Distinction
If you are aging into Medicare eligibility (turning 65) you must understand that the rules for Medicare and Social Security are different.
Enrollment With Social Security (Automatic Enrollment)
If you begin taking Social Security Before age 65, you will be automatically enrolled in Medicare starting in the month you turn 65. You can also arrange to have your Part B premium deducted from your Social Security benefit payment each month. You will still need to sign up for a Part D prescription drug plan (PDP) and supplementary plan or enroll in a Medicare Advantage plan.
Separate Medicare (Only) Enrollment
If you are working, you may want to wait until full retirement age (66 and 2 months or more) to receive Social Security benefits, but you are still eligible for Medicare at age 65. If you want to enroll in Medicare, you must sign up by calling Social Security or enrolling online at ww.ssa.gov.
You will still want to create a MySocialSecurity account for access to the system. You can also see info at the Medicare website (www.medicare.gov).
If you take Medicare without Social Security, you will get a billed quarterly. See our Medicare section for more info.
Keep in mind
- Claiming benefits before full retirement age will lower your monthly payments; the earlier you file — you can start at age 62 — the greater the reduction in benefits. At age 62, the reduction is around 30%. Spousal and survivor benefits are also reduced if you claim them early.
- You can increase your retirement benefits by waiting past your FRA to retire. If you can afford to wit, you’ll receive a higher benefit. Each month you put off filing up to age 70 earns you delayed retirement credits that boost your eventual benefit.
- Once you hit age 70, the benefits are at maximum level other than cost of living increases, so there is no point to delay further.
How much can I earn in the year I reach full retirement age (FRA) without losing Social Security benefits?
In 2020, people who reach full retirement age (FRA) — the age at which you qualify for 100 percent of the benefit calculated from your earnings record — can earn up to $48,600 without losing benefits. Above that amount, Social Security will deduct $1 for every $3 in income. But Social Security only factors in money you earned before you hit FRA; after that, you get your full monthly benefit payment, no matter how much you earn from work.
When the Social Security Administration applies its earnings test, only earned income is considered, such as wages from a job or profits from a business you own and operate. Investment income doesn’t count, nor do capital gains, pension income or income from any annuities you have.
Earnings Prior to FRA
- In the years before you reach FRA, your income is subject to more onerous withholding: $1 for every $2 in earnings above $18,240. For a quick check on how work income affects your retirement benefits, use Social Security’s Retirement Earnings Test Calculator.
- Working while collecting Social Security might lower your benefits before you hit full retirement age, but it might increase them in the long run. That’s because
Social Security annually reviews your earnings record, and if that income ranks in the top 35 years, it will increase your benefits down the road. Social Security will withhold benefits starting at the beginning of the year. They do not pay partial monthly benefits based on estimated earnings. Next year, when they know how much you actually earned in 2020, they will calculate how much your benefits should have been reduced. Then they will pay you any excess benefits they may have withheld or let you know if they did not withhold enough.
If you are receiving a benefit that was initially reduced because of your age, they will recalculate your benefit after you reach your full retirement age (66 and 2 months). This recalculation will give you credit for any months in which you did not receive some benefit because of your earnings. In addition, as long as you continue to work and receive benefits,
they will check your record every year to see whether the additional earnings will increase your monthly benefit.
Limits on taxable earnings for Social Security…
There’s a limit on the amount of earnings on which you pay Social Security taxes each year. The limit usually increases yearly. Earnings above the limit will not appear on your earnings chart as Social Security earnings. (For Medicare taxes, the maximum earnings amount began rising in 1991. Since 1994, all of your earnings are taxed for Medicare.) Note: Currently, you and your employer each pay a 6.2 percent Social Security tax on up to $137,700 of your earnings and a 1.45 percent Medicare tax on all your earnings. If you are self-employed, you pay the combined employee and employer amount, which is a 12.4 percent Social Security tax on up to $137,700 of your net earnings and a 2.9 percent Medicare tax on your entire net earnings. If you have earned income of more than $200,000 ($250,000 for married couples filing jointly), you must pay 0.9 percent more in Medicare taxes.
Link for (future) Social Security Video
Link for (future) Medicare 101 Video
Link to Schedule an Appointment