The decision to file for Social Security is not an easy one to make. That's because your filing age will impact the amount of money you receive from the program each month.
The earliest age you can sign up for benefits is age 62. However, you're not entitled to your full monthly benefit based on your earnings history until you reach full retirement age, or FRA. FRA kicks in at 66, 67, or 66 and a specific number of months, depending on when you were born.
Now you may have your reasons for claiming Social Security ahead of FRA. Maybe your health is poor and you're no longer able to work on a full-time basis. Or maybe you want to use those benefits to pay for travel at an age when you're still young enough to enjoy it the most.
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For some people, claiming Social Security early is indeed the right call. But if you're going to go that route, it's important to know these specific rules.
1. The lower benefit you lock in will be the benefit you're stuck with for life
Some people think that if they claim Social Security early and get a lower monthly benefit in the process, once they reach FRA, their benefit will be restored to its full amount. But that's not at all how the program works. If you file for Social Security before FRA, you'll be stuck with the lower monthly benefit you lock in forever (not including the annual boost you might get as cost-of-living adjustments are applied across the board).
Now there is one exception. If you withdraw your Social Security claim within a year and pay back all of the benefits you received within that same time frame, you can undo your filing and sign up again at a later age. But paying back up to a year's worth of benefits isn't an easy thing to do, so if you're going to file early, assume that the monthly benefit you start out with is the one you'll always collect.
2. You could have some benefits withheld if you work and earn too much
Once you reach FRA, you can earn any amount and not have it impact your Social Security benefits. But if you work and collect Social Security before FRA, you'll risk having some benefits withheld if your income exceeds the annual earnings-test limits.
Now those limits change every year. This year, you can earn up to $19,560 without having benefits impacted. From there, you risk having $1 in Social Security withheld for every $2 you earn.
If you're reaching FRA this year, that limit increases to $51,960. From there, you risk having $1 in Social Security withheld for every $3 you earn.
3. Your lower benefit could result in lower survivors benefits for your spouse
If you have a spouse you expect to outlive you by many years, you may want to think twice before claiming Social Security early. If you lock in a lower monthly benefit, you'll leave your surviving spouse a lower monthly benefit for the rest of their life.
Now if your spouse was a high earner and is therefore entitled to a generous Social Security benefit of their own, this may not be an issue. But it's something to think about if you're the higher earner.
Know the rules
It's great that you get choices when it comes to claiming Social Security. But if you're going to file for benefits early, make sure you're fully aware of the rules that apply.
