Many people don't bother concerning themselves with Social Security until filing for it becomes a reality. But if you're in your 60s, those benefits might come into play sooner than expected. Here are a few things all older workers should know about Social Security -- especially during what could end up being the most pivotal decade of your career.
1. You may be coming up on your full retirement age
Though you're allowed to file for Social Security as early as age 62, many workers choose to hold off on benefits until their full retirement age (FRA) rolls around. This way, they get to collect the full monthly benefit their work history entitles them to without having to worry about facing a reduction for filing early. That said, your FRA could be just around the corner, depending on your year of birth.
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If you were born in 1954 or earlier, your full retirement age is 66. FRA then increases slightly for those born later, as follows:
|
Year of Birth |
Full Retirement Age |
|---|---|
|
1943-1954 |
66 |
|
1955 |
66 and 2 months |
|
1956 |
66 and 4 months |
|
1957 |
66 and 6 months |
|
1958 |
66 and 8 months |
|
1959 |
66 and 10 months |
|
1960 |
67 |
DATA SOURCE: SOCIAL SECURITY ADMINISTRATION.
Pay attention to your FRA, and develop a filing strategy around that age. This doesn't mean that you should file at your precise full retirement age -- rather, figure out when that age is and determine the best time to start taking benefits in relation to it.
2. You can only delay your benefits for so long
Filing for Social Security at FRA is a good way to ensure that you get your full monthly benefit. At the same time, if you delay benefits past FRA, you'll snag an 8% boost on those payments for each year you hold off.
But don't make plans to delay those benefits indefinitely. Once you turn 70, you can no longer accrue delayed retirement credits that increase your monthly payments, so if you're in your late 60s and haven't yet filed for Social Security, mark your calendar to do so in conjunction with your 70th birthday.
3. Working longer could boost your benefits
Though the age at which you first file for Social Security can impact your monthly benefits, those payments themselves are calculated based on how much you earned during your top 35 working years. Therefore, if you're eager to boost your benefits in time for retirement, working a bit longer could achieve that key goal.
Imagine you're 66 and are ready to take benefits at full retirement age, but your work record is limited to 33 years. This means that you'll have $0 factored in for two out of 35 years in the formula that establishes your full benefit amount, thereby lowering that number. On the other hand, if you work two extra years and replace those two zeros with an actual salary, your personal formula will change and your monthly benefits will go up.
The same holds true if you're making far more money in your 60s than you were earlier in life. If you're able to replace two years of $25,000 in earnings with two years of $125,000 in earnings, your monthly benefits stand to climb as well.
Your 60s are the perfect time to get serious about Social Security, so even if you're not planning or able to file just yet, it pays to read up on how the program works. The more you learn about Social Security, the better positioned you'll be to make the most of your benefits, no matter when you actually claim them.
