Even if you manage to build up a nice nest egg ahead of retirement, once you stop working, you may become pretty reliant on the income Social Security pays you. So it's important to make the most of your benefits and file at the right time.
You may be thinking of claiming benefits for the first time in 2023. As long as you're at least 62 years old, that option will be on the table. But that doesn't mean filing in 2023 is the right choice for you. Or maybe it is.
Everyone's situation is different. But no matter what, you'll want to avoid these key Social Security mistakes in the new year.
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1. Filing without knowing your full retirement age
Full retirement age (FRA) is when you're entitled to collect your complete Social Security benefit based on your personal wage history. That age is either 66, 67, or somewhere in between, depending on your year of birth.
You may be eligible for Social Security in 2023 by virtue of turning 62. But that doesn't mean you'll be eligible for your full monthly benefit.
Claiming benefits ahead of FRA means reducing them to a smaller amount. And if you file early, you'll generally be stuck with the lower monthly benefit you lock in for the rest of your life. That could cause financial problems throughout your retirement.
2. Delaying your filing past the age of 70
For each year you delay your Social Security filing past FRA, your monthly benefits get an 8% boost. And that boost remains in effect for the rest of your life, so that's a nice perk.
But there's no sense in delaying your filing past the age of 70, because once you reach that age, your benefits can't grow. So if you'll be turning 70 in 2023, mark that date as your Social Security sign-up date so you can start collecting the money you're entitled to.
3. Claiming benefits before consulting your spouse
You may be eager to file for Social Security in 2023. But if you're married, that's really a discussion you'll want to have with your spouse first.
It may be that your spouse is also entitled to Social Security, and they think you should both delay your respective claims to score a higher monthly payday for life. Or maybe your spouse wants to file for their own Social Security benefit in 2023, but have you delay your claim because you're the higher earner. Having that discussion ahead of time could spare you and your spouse a world of financial regret -- not to mention help keep the peace at home.
You may have some big Social Security decisions to make once 2023 rolls around. Be sure to read up on the program's rules ahead of time so you know what choices are best. At the same time, if you share a life (financial and otherwise) with another person, make sure to loop them into your thought processes before claiming Social Security, so you don't end up with a conflict on your hands.
