October 24, 2010

INDIA: Ways to Maximising Retirement Benefits

MOHALI, Punjab / The Money Times / October 24, 2010

Nearing retirement, and wondering when to apply for security benefits? Well, more years of work could mean a better life post retirement

In short, more years of work leads to increased income that further results in more retirement benefits.

By Anupreet Kaur

The government's social security program, has definitely made it is easy for the baby boomers to plan retirement.

Also termed as the Old Age, Survivors, and Disability Insurance (OASDI), this is one of the largest insurance program in the nation that is funded from payroll taxes.

As per this program, a fixed percentage of a worker’s earning is transferred directly into the social security funds. Consequently, these funds aid the current recipients of social security benefits. And the cycle goes on.

Though the program assures returns, the benefits can be increased or decreased depending on certain conditions.

So if you are nearing retirement, consider the following guidelines to attain the maximum benefits from social security program.

Know Your Full Retirement Age

Before applying for social security, determine the age when you want to start attaining benefits. Earliest age from when you can start enjoying the benefits is 62 years.

For instance, if you are born in 1956, then your full retirement age is 66 and 4 months. If it's 1960 and later, then full retirement age comes to 67.

How Does It Work?

In case you decide to claim it at 62, then a certain percentage is deducted till you attain your full retirement age. As a result you will get less benefits.

Interestingly, if claimed at full retirement age, then you are likely to experience more benefits.

But if this program is claimed after full retirement age, then you certainly get to enjoy increased benefits.

In short, more years of work leads to increased income that further results in more retirement benefits.

When Social Security Benefits Are Reduced?

As you are aware of the full retirement age, avoid applying for benefit at the age of 62.

If you are single, young and have less savings, it is advisable to work for more years to yield more benefits. As once you apply for these benefits, then a certain amount will be deducted till you attain the full retirement age.

Also, the social security benefits get reduced in case if you earn in excess of your annual earnings limit before reaching the full retirement age.

Should Benefits Be Attained at 62?

Claiming benefits at this age is recommended for people with health issues and shorter life expectancy. Even those who are married can consider this.

Also, if one can bear a reduction in their savings, he can claim benefits early.

Delaying Social Security Beneficial

The retirement benefit is based on the amount you earn while working. In a nutshell, the more you work, more benefits you enjoy. The benefit also depends on the age you retire at.

Try doing work till full retirement age in order to enjoy program benefits. In case of illness, disability, or any major issue, opting for such benefits at 62 will be a better option.

Marriage and Divorce Are Incentives

If your spouse starts taking social security benefits and you are 62 or of more age, you can apply for your own benefit.

If your spouse receives more than double of your amount, you can apply for a portion of your own benefit as well as a portion of your spouse’s benefit.

In case you are 62-years- old and divorced after 10 years of marriage, you are eligible for these benefits in case your ex-spouse starts taking social security benefits.

Option for Resetting

Such security programs have an option of resetting. If you have started enjoying the benefits and you want to stop to enjoy such benefits later, then can have the program reset.

For this, you might have to return the benefit you received till that time, but it will be interest free. No extra charges will be deducted by the government.

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