FICA is an acronym known to everyone who works for pay. It’s that little bit of money that disappears from your paycheck each time. Most people have a vague sense that this money is held back by the government to aid in your retirement. But not everyone knows how it works.
Don’t expect a lot of help from the Social Security Administration. They aren’t into the nitty gritty for each beneficiary. It’s up to you to learn where your FICA dollars go and when you can expect to draw on the accumulation as you retire. There are many ways and you need to analyze these and choose what’s best for you.
Married couples have a number of options, according to a Bankrate.com article. Alicia Munnell, director of the Center for Retirement research at Boston College, advises that the ultimate option is to wait until you are 70 to begin benefits. The payment then is 76 percent higher that it would be if you start at 62 and 32 percent higher than if you chose to start withdrawing at age 66.
If this is your choice, of course, you have to accept the fact that you are gambling on living far enough beyond 70 to make it worthwhile. If you have inklings that your health is not going to be that great, you probably should opt for the earlier benefits.
Some financial experts believe that the odds are against your making money by waiting until age 70 to claim benefits. They advocate the “take the money and run” position. It’s what Verton Bernstein, retired law professor and Social Security expert, advises.
Marital status can make a difference. Divorcing before you have been married 10 years will deprive you of the ability to claim a share of the ex-spouse’s Social Security benefits. If you are ready to bail out of the marriage at nine years and 11 months, hold on a month. Then you are eligible for Social Security benefits on up to half of the ex’s earnings or on the basis of your own earnings, whichever is greater.
If the ex-spouse dies, you’ll be treated as the widow or widower in this scenario. If the ex was a big earner, it would be wise, if possible, to delay collecting on this benefit until you are 70, when you would receive the maximum benefit. If the ex continues to live a long life, encourage him/her, if possible, to delay retirement until age 70. If you both survive beyond age 66, you might choose to collect half of the ex’s benefit while leaving your own intact until you are 70.
The intricacies of the shared benefits are baffling to some, and it may be wise to hire a lawyer or tax expert to help you make decisions.
The same holds true if you are applying for SSDI benefits related to health issues. An applicant is entitled to representation from the onset of the application process, but Social Security doesn’t always make that clear. Many applicants wait until a claim has been denied, then seek help. That slows the process considerably.
When you’re thinking about retirement, remember that Social Security bases your benefit on the 35 highest earnings years. The figures are adjusted for in If you have less than 35 years of work experience, they will use zeros to make up the difference. That seriously brings down the total that is the basis for your benefit. If you are in a reasonable reach of 35 years, make an effort to stick it out for the sake of a higher benefit.