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Is 2021 Your Year to Claim Social Security?

By Katie Brockman - Jan 3, 2021 at 9:05AM

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Here's what you need to know before deciding to claim benefits.

One of the most critical decisions to consider while planning for retirement is when you want to begin claiming Social Security benefits. You can file for benefits starting at age 62, but waiting until after that age to claim will result in larger checks each month.

If you're thinking about claiming Social Security in 2021, it's important to understand how it will affect your monthly payments. By filing for benefits at the right age, you can maximize your checks.

Senior couple sitting on the couch together smiling

Image source: Getty Images.

Choosing the best age to claim benefits

Age 62 is the most popular age to file for Social Security benefits, according to a report from the Center for Retirement Research at Boston College. But the age you choose to claim is highly personal, and it will depend on your unique situation.

Before you begin claiming, make sure you understand your full retirement age (FRA) -- or the age at which you'll receive the full benefit amount you're entitled to. If you were born in 1960 or later, your FRA is 67 years old. If you were born before 1960, you have a FRA of either 66 or 66 and a certain number of months. Those turning 62 in 2021 have a FRA of 66 years and 10 months, for example.

The age you claim directly affects how much you'll receive each month. For example, say you have a FRA of 66 years and 10 months, and you'd receive $1,500 per month by claiming at that age. If you claim at age 62 in 2021, you'll receive 70.8% of your full benefit amount, or $1,062 per month.

Keep in mind, too, that by claiming early, these benefit reductions will be permanent. In other words, you won't start receiving more money each month once you reach your FRA. This means it's critical to ensure you've thought about this decision carefully.

Are you ready to file for benefits?

No matter what age you choose to claim, it's important to make sure you're ready before you begin claiming benefits. Once you file for Social Security, your decision is generally locked in for the rest of your life. So if you change your mind a few years down the road, you may not be able to do anything about it.

One factor to consider before you file for benefits is how much you have in savings. If you have a healthy retirement fund, you may not need to rely as much on Social Security benefits. But if you know money will be tight in retirement, you may opt to delay claiming benefits to earn larger checks.

It's also a good idea to create a claiming strategy with your spouse. If you're both entitled to benefits, it can be wise to have one spouse claim before the other. For example, the lower-earning spouse may claim at age 62 so the two of you have some extra income earlier in retirement. Then the higher-earning spouse can delay benefits until age 70 to earn as much as possible each month.

Finally, think about whether you want to continue working part-time after you claim benefits. If you haven't reached your FRA yet, working after claiming benefits could temporarily reduce your monthly payments. The good news is that the Social Security Administration will recalculate your benefit amount at your FRA to account for any benefits that were withheld due to your income. But keep in mind that, at least in the short term, you may receive less than you expect each month if you continue to work.

Choosing when to claim Social Security is an important step in the retirement planning process. If you think you're ready to begin claiming in 2021, make sure you understand all the factors that can affect your benefits. The more you know about how the program works, the better off you'll be in retirement.

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