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Handy ways to estimate your Social Security, Medicare benefits

In 1937, a man named Ernest Ackerman received the first ever Social Security payment from the U.S. government for a whopping 17 cents. Back then, Social Security was primarily a retirement fund. Today, it is safety net for people over the age of 65, disabled children and adults, and children with disabled, retired or deceased parents. The program has also expanded to include Medicare, which provides health insurance to qualifying beneficiaries. Yet in this maze of who gets what and how much, factoring Social Security benefits into your personal finances can be a bit dizzying. Here is a handy guide to help you feel more secure about Social Security and Medicare:How to estimate retirement benefitsAccording to the federal government, your Social Security retirement benefits should amount to approximately 40 percent of your average work earnings. This average is calculated from the 35 years of work during which you made the most money, up until the age of 62. In short, if you average out your earnings from your most lucrative 35 years, your retirement benefits will be about 40 percent of that amount. Be careful with your calculations, though. Your earnings are always estimated with the base of 35 years, so if you worked 25 years before retirement, the Social Security office will include the 10 years in which you earned nothing. This will greatly lower your average.When to start claiming benefitsYour monthly benefit amount will vary depending on when you decide to retire. The government says a normal retirement age begins at either 66 or 67, depending on when you were born. Retiring before the normal or full retirement age could mean losing up to 30 percent of your benefits. Nonetheless, there is an upside to retiring early: while your monthly payments may be smaller, you get them over a longer period of time. On the other hand, retiring later means you will receive larger monthly payments for a shorter period of time.When to sign up for MedicareRegardless of when you retire, you should sign up for Medicare at least three months before you turn 65 years old. This makes sure your Medicare insurance kicks in on time, saving you money on health care and medicine. People with disabilities, permanent kidney failure, or Lou Gehrig’s disease can sign up for Medicare before 65. Medicare benefits can include hospital care, doctors’ services, private insurance plans and prescription drug coverage.How your spouse can receive benefitsIt does not matter whether your spouse has ever worked or paid Social Security taxes. He or she can collect benefits at no expense to you. The benefits paid to your spouse will not reduce your own retirement benefit. As early as 62, he or she can claim retirement benefits. If he or she waits until full retirement age, your spouse can receive one-half of your retirement amount. As for Medicare, you can make a date of it and both sign up at 65. Widows, widowers and divorced spouses may also be eligible for these benefits.How to increase your monthly benefitsOf course, retiring doesn’t mean gluing your hands together and never working again. If you claim retirement early, then return to work, your benefits may be withheld because of your earnings. However, the withheld amount will eventually be factored back into your Social Security benefits. Your benefit would be recalculated at full retirement age (typically 66 or 67), and from then on, you will most likely receive a higher monthly amount. If the latest years of returning to work happen to be particularly high-earning, your benefits will be recalculated accordingly, and you will receive any due increase.