The initial installment of May’s trio of Social Security payments, valued at up to $4,555, will be distributed to retirees in three days, as per the Social Security Administration’s timetable. Those born between the 1st and the 10th of their birth month will receive the payment, which will be disbursed on May 10th, the second Wednesday of May. Payments are sent out on the second, third, and fourth Wednesdays of each month.
The amount each recipient receives is based on their age at the time of retirement. According to the Social Security, those who retired at 67 are eligible for a maximum monthly payment of $3,627. Individuals who retired at 62 can receive up to $2,572, while those who postponed retirement until 70 obtain the highest monthly payment of $4,555.
Additional rounds of payments from Social Security
Two additional rounds of payments will be distributed to retirees later in the month. The second payment, slated for May 17—the third Wednesday of May—will be given to recipients born between the 11th and 20th of their birth month. The final disbursement is scheduled for May 24, the fourth Wednesday of the month, and is intended for those born between the 21st and 31st of their birth month.
Recipients may experience a reduction in their payments if Congress fails to establish a funding plan for the program by 2037. Debates surrounding the future of Social Security have persisted in Congress for years, and experts have recently cautioned that the program could become insolvent within a decade if no action is taken.
Some legislators have suggested raising the age for receiving full benefits from 67 to 70. Currently, workers can retire and start collecting Social Security as early as 62, or they can choose to postpone retirement until age 70 in order to receive a larger monthly payment.
Do you pay higher taxes in retirement? This is what you need to know
Your Social Security retirement benefits are calculated based on your earnings history over your working years. The Social Security Administration (SSA) looks at your 35 highest-earning years to calculate your Average Indexed Monthly Earnings (AIME). The AIME is then used to calculate your Primary Insurance Amount (PIA), which is the amount you’ll receive each month in retirement. The age at which you start receiving benefits will also impact the amount you receive.
The answer to whether you’ll pay higher taxes in retirement depends on several factors, such as the type of retirement accounts you have, your income level, and where you live. For example, if you have a traditional 401(k) or traditional IRA, your withdrawals will be taxed as ordinary income. If your income level remains the same or even increases in retirement, you may end up paying higher taxes.
However, if you have a Roth 401(k) or Roth IRA, your withdrawals will be tax-free in retirement, as long as you meet certain requirements. Furthermore, if you have other sources of retirement income, such as Social Security or a pension, your tax liability may be lower.
Now, the state you live in, when you get to retire to enjoy your senior years, will impact in how much taxes you pay over your Social Security money. Some states have lower tax rates than others, which can have a big impact on your retirement income. For example, states like Florida, Texas, and Nevada have no state income tax, while others, like California and New York, have high state income tax rates.