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Should You Claim Social Security As Soon As You Retire?

By Maurie Backman – Jan 5, 2022 at 5:02AM

Key Points

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The quick answer? Not necessarily.

Many people embrace their first few weeks of retirement by living it up and doing the things they couldn't do while bound to a work schedule. That may include taking a big trip, spending extra time with loved ones, or even just kicking back and relaxing.

If you're brand-new to retirement, you may be thinking of filing for Social Security right away. But is that the best call?

When to claim benefits

There are a couple of factors that should dictate whether signing up for Social Security immediately upon retirement is a good idea:

  • Your age
  • Your financial picture

If you retire too early, you may even be able to file for Social Security. The soonest you can sign up is age 62, and if you're retiring before then, you'll need to wait.

Smiling person knitting.

Image source: Getty Images.

Otherwise, you should know that you're eligible for your full monthly benefit based on your wage history at full retirement age (FRA). FRA is either 66, 67, or somewhere in between, depending on your year of birth.

If you're retiring at age 65 but don't need your benefits right away to pay your bills, then it could make sense to hold off until FRA to claim then. For each month you file for Social Security before FRA, your benefits are subject to a permanent reduction.

You can also delay your filing beyond FRA. For each month you hold off, your benefits will get a boost, up until you turn 70.

Now, let's assume that you've retired at an age where you're old enough to be eligible for Social Security. If that's that case, you'll need to consider what your finances look like.

If you need your Social Security income to stay afloat, then you may have no choice but to file right away, even if that means claiming benefits before FRA. But if you have other income sources available to you, you may want to wait to file to avoid shrinking your benefits, or to grow your benefits and enjoy a higher payday for life.

The latter move makes sense if you don't have very much in the way of retirement savings. Say you've left the workforce and can get by on income from a small pension for a short while. If that's the case, and you don't have a lot of money in your IRA or 401(k), you may want to delay your filing, even if it's just for a few months, to squeeze more money out of Social Security.

Make a plan in advance

Unless you've suddenly been forced into retirement without warning, ideally, you should have a plan for claiming Social Security before that milestone arrives. In fact, it's important to set up a retirement budget and figure out where the money to pay your bills will come from before leaving the workforce. You may decide that you'll take benefits right away once you're retired and pay a large chunk of your expenses with Social Security income -- and that's fine. The key is to go in prepared and take some time to arrive at your filing decision.

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