In 2018, 5.6 million people were newly awarded benefits from Social Security. These payments are one of the most important sources of income for retirees.
Unfortunately, before starting their checks, many people don't realize that their age at the time they first file for benefits makes a huge impact on the amount they'll get each month. And as the coronavirus continues to cause economic uncertainty, it's more important than ever to consider the trade-offs you have to make if you file early versus waiting to claim.
Before you decide what's right for you, look at the charts below.
Image source: Getty Images.
How your age affects your benefit amount
Your age when you claim benefits affects your monthly checks for life. Those who claim before their full retirement age (between 66 and 67) get hit with early filing penalties, whereas retirees who don't file until after full retirement age (FRA) can earn delayed retirement credits (benefit increases) up until 70.
Early filing penalties and delayed retirement credits lower or raise your standard benefit by a small percentage for each month you're early or you delay.
The chart below shows how early filing penalties trim your benefit depending on how many months you start receiving checks before FRA.
|
Months Before FRA |
Reduction in Benefits |
Months Before FRA |
Reduction in Benefits |
Months Before FRA |
Reduction in Benefits |
|---|---|---|---|---|---|
|
1 |
0.556% |
21 |
11.667% |
41 |
22.083% |
|
2 |
1.111% |
22 |
12.222% |
42 |
22.500% |
|
3 |
1.667% |
23 |
12.778% |
43 |
22.917% |
|
4 |
2.222% |
24 |
13.333% |
44 |
23.333% |
|
5 |
2.778% |
25 |
13.889% |
45 |
23.750% |
|
6 |
3.333% |
26 |
14.444% |
46 |
24.167% |
|
7 |
3.889% |
27 |
15.000% |
47 |
24.583% |
|
8 |
4.444% |
28 |
15.556% |
48 |
25.000% |
|
9 |
5.000% |
29 |
16.111% |
49 |
25.417% |
|
10 |
5.556% |
30 |
16.667% |
50 |
25.833% |
|
11 |
6.111% |
31 |
17.222% |
51 |
26.250% |
|
12 |
6.667% |
32 |
17.778% |
52 |
26.667% |
|
13 |
7.222% |
33 |
18.333% |
53 |
27.083% |
|
14 |
7.778% |
34 |
18.889% |
54 |
27.500% |
|
15 |
8.333% |
35 |
19.444% |
55 |
27.917% |
|
16 |
8.889% |
36 |
20.000% |
56 |
28.333% |
|
17 |
9.444% |
37 |
20.417% |
57 |
28.750% |
|
18 |
10.000% |
38 |
20.833% |
58 |
29.167% |
|
19 |
10.556% |
39 |
21.250% |
59 |
29.583% |
|
20 |
11.111% |
40 |
21.667% |
60 |
30.000% |
Table by author.
To use the chart, determine what your standard benefit amount would be (you can find it on your online Social Security account) and reduce it by the percentage based on how early you plan to claim. If you're planning to retire six months ahead of schedule and your standard benefit was going to be $1,500, a 3.333% cut reduces it to about $1,450.
If you're thinking about waiting until after FRA, the chart below shows how your checks will be increased by delayed retirement credits.
|
Months After FRA |
Increase in Benefits |
Months After FRA |
Increase in Benefits |
Months After FRA |
Increase in Benefits |
Months After FRA |
Increase in Benefits |
|---|---|---|---|---|---|---|---|
|
1 |
0.667% |
13 |
8.667% |
25 |
16.667% |
37 |
24.667% |
|
2 |
1.333% |
14 |
9.333% |
26 |
17.333% |
38 |
25.333% |
|
3 |
2.000% |
15 |
10.000% |
27 |
18.000% |
39 |
26.000% |
|
4 |
2.667% |
16 |
10.667% |
28 |
18.667% |
40 |
26.667% |
|
5 |
3.333% |
17 |
11.333% |
29 |
19.333% |
41 |
27.333% |
|
6 |
4.000% |
18 |
12.000% |
30 |
20.000% |
42 |
28.000% |
|
7 |
4.667% |
19 |
12.667% |
31 |
20.667% |
43 |
28.667% |
|
8 |
5.333% |
20 |
13.333% |
32 |
21.333% |
44 |
29.333% |
|
9 |
6.000% |
21 |
14.000% |
33 |
22.000% |
45 |
30.000% |
|
10 |
6.667% |
22 |
14.667% |
34 |
22.667% |
46 |
30.667% |
|
11 |
7.333% |
23 |
15.333% |
35 |
23.333% |
47 |
31.333% |
|
12 |
8.000% |
24 |
16.000% |
36 |
24.000% |
48 |
32.000% |
Table by author.
This time, you'll multiply your standard benefit amount by the appropriate increase based on the number of months you delay. If you wait 12 months, you multiply a standard benefit of $1,500 by 1.08 to get a $1,620 check.
Remember that although your checks are higher, you're giving up months of income by delaying. So your bigger checks will result in more lifetime income only after the extra amount you receive makes up for the money you missed out on.
Consider these charts before you file for Social Security
Once you start your Social Security checks, you're stuck with the claiming strategy you chose. If you reduced your benefits by claiming them early, they won't be recalculated at FRA. You'll have a lower benefit for life unless you cancel and repay benefits within a year.
The charts above will help you to make an informed choice about whether you want a reduction to get your money ASAP, or wait to get larger checks later.
