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Ready to Claim Social Security? Do These 5 Things First

By Christy Bieber - Nov 29, 2020 at 9:19AM

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Be sure to check them off your list.

You have lots of choices about when to claim Social Security. In fact, you can start your benefits as soon as age 62. You can also wait and earn delayed retirement credits (which raise your benefits) until you're 70, after which there's no further benefit to delay.

Once you start your benefits, however, undoing them can be difficult. That means you'll want to be sure you're ready before you file for them. To do that, check these five tasks off your to-do list first.

Older couple reviewing paperwork with financial advisor.

Image source: Getty Images.

1. Assess your health status

Social Security penalizes early claimants with smaller checks while rewarding those who delay with a benefit boost. Filing five years ahead of full retirement age (FRA), which is between 66 and 67, could result in as much as a 30% reduction in benefits. Those who delay beyond FRA can earn delayed retirement credits each month until age 70. These add up to 8% annual increases. 

The goal of early filing penalties and delayed retirement credits is to equalize out the lifetime benefits seniors get, so it theoretically doesn't matter when someone first claims them. But in practice, individual retirees may either outlive their projected lifespans --  in which case they'd receive more total benefits if they waited -- or live for a shorter time, in which case they'd be better off with an early claim. 

You can't predict how long you'll live, but your current health status can be a guide. If you're in great shape and your family members all lived very long lives, you may want to bet on living longer than actuaries predict and claim your benefits later. But if you're struggling with health issues already, an early claim could leave you with more Social Security money. It could also enable retirement earlier on while you're still healthy enough to enjoy it. 

2. Project your benefits 

Before you claim Social Security benefits, it's important to get a clear idea of how much income your checks will provide. For most people, it's less than they anticipate, as Social Security benefits are really only meant to replace about 40% of pre-retirement income. In other words, they aren't enough to live on. 

If you're planning on claiming your benefits, sign into your Social Security account to find out how much money you'll get each month. Make sure it'll be enough when combined with any savings you have. Otherwise, you could find yourself struggling financially throughout retirement.

If you find your benefits and savings are insufficient, you may decide to delay claiming them to raise the amount, or may opt to delay because you find you'd rather work a few extra years and save for a more comfortable future. 

3. Talk with your spouse

For married couples, Social Security becomes a lot more complicated because the decision you make won't just affect you.

If you're the high-earning spouse and you claim Social Security early, you'll shrink survivor benefits your partner would receive if you die first. This could leave your loved one in dire straits. On the other hand, if your spouse isn't eligible for benefits of his or her own and plans to claim spousal benefits on your work record, that won't be possible until you've started getting your checks. 

The bottom line is, you need to sit down together (potentially with a financial advisor) and decide when each of you should claim your Social Security checks. 

4. Decide if you're going to work in retirement

You can work while collecting Social Security benefits, so plans to hold down a job don't necessarily mean you must put your benefits claim on the back burner.

However, if you are under full retirement age, you'll end up forfeiting some of your benefits if you earn too much. While your check amount will be recalculated at full retirement age to make up for forfeited benefits, you still won't get all of your Social Security money in the meantime. 

If you're thinking about continuing to get a paycheck and are under full retirement age, check the earning limits and see if you'll end up losing some or all of your money. If you will, you may find it makes no sense to claim Social Security now when you won't get much of the money anyway.

5. Consider the trade-offs

There are advantages and disadvantages associated with any age you claim benefits. If you wait even a month after turning 62, you'll forgo checks in some months when you could have received them. But if you don't wait until 70, you'll be shrinking your monthly checks relative to the amount you could've received.

Some people prefer a larger check even if they have to wait a long time to get it. After all, these benefits provide a guaranteed source of inflation-protected lifetime income. But many others would rather get money when they're younger and can enjoy it more -- especially if claiming Social Security is essential to being able to retire at all.

It's up to you which approach is the right one. The important thing is to understand how your decision affects your check size, and your spouse, so you can make a fully informed choice. If you haven't done that, you aren't really ready to claim Social Security benefits and should wait until you've fully assessed how your choice to file for benefits will affect your future. 

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