Many seniors end up relying heavily on Social Security once they close out their careers. And chances are, you'll do the same. That's why it's so important to claim benefits at the right time.
The earliest age at which to file for Social Security is 62. While you won't be forced to sign up for benefits at age 70, that's generally considered the latest filing age since there's no financial advantage to delaying a filing beyond that point.
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You may decide to claim Social Security at 62, 70, or somewhere in between. But before you sign up for benefits, make sure you can answer these important questions.
1. What's my full retirement age?
At full retirement age (FRA), you can collect your full monthly Social Security benefit based on your income history. Filing for benefits before FRA will reduce them for life, and that's a hit you may not want to take. Or maybe it's a hit you're willing to take to get your money sooner.
But that should be a choice, and you should know your FRA before signing up. You can consult this table to see what FRA looks like for you based on your year of birth:
|
Year of Birth |
Full Retirement Age |
|---|---|
|
1943-1954 |
66 |
|
1955 |
66 and 2 months |
|
1956 |
66 and 4 months |
|
1957 |
66 and 6 months |
|
1958 |
66 and 8 months |
|
1959 |
66 and 10 months |
|
1960 or later |
67 |
Data source: Social Security Administration.
2. What does my monthly benefit look like?
You might think you're entitled to $2,000 a month from Social Security, only to realize you're only eligible for just $1,700 at FRA. That might motivate you to delay your filing so you can grow your benefit into a larger number.
It's important to know what monthly benefit you're in line for prior to claiming Social Security. And there's an easy way to find that out.
Simply create an account at SSA.gov and access your most recent earnings statement. It will give you an estimate of your retirement benefit so you know what to expect. You can then run the numbers to see what a delayed filing can do for you, keeping in mind that for each year you postpone your filing past FRA, your monthly benefit will get an 8% boost -- and a permanent one at that.
3. What am I using the money for?
You may be inclined to file for Social Security as soon as you can, simply to get your hands on money you're entitled to. But if you don't have a specific need for that money, you might as well hold off on claiming benefits so you can let them grow.
Of course, if you do have a reason to file for Social Security before age 70, then by all means, take the cash. Maybe claiming benefits at age 65 will give you seed money to start a small business that ends up being lucrative and allows you to pursue an opportunity that's more exciting than the job you held down during your career. But there should be a reason for collecting that money.
Your Social Security filing decision isn't one to take lightly. Ask yourself these important questions so you don't sign up for benefits at the wrong time and regret your choice after the fact.
