Retirement takes loads of planning, and if you're expecting to rely on Social Security, it's especially important to figure out how your benefits will factor into your plan.
Whether you're retiring this year or several years down the road, now is the time to start preparing for Social Security. By making these three moves right now, you can maximize your benefits and enjoy a more comfortable retirement.
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1. Know your full retirement age
Your full retirement age (FRA) is the age at which you're eligible for your full benefit amount based on your work record. Your exact FRA will depend on your birth year, but it will fall between ages 66 and 67 for everyone.
If you file for Social Security before your FRA, your benefits will be permanently reduced by up to 30%. On the other hand, by waiting until after your FRA to begin claiming, you'll receive your full benefit amount plus up to 32% extra each month.
When you know your FRA, it will be easier to determine how your age will affect your benefit amount. There's no harm in claiming early or delaying Social Security, but you will need to know how those decisions will impact your monthly income.
2. Check your estimated benefit amount
Even if you're not retired yet, you can see your future benefit amount online by creating a mySocialSecurity account. Once logged in, you can check your statements to see an estimate of your future benefit amount based on your real earnings.
If you're still several years from retirement, that number could change by the time you begin claiming -- especially if you experience a significant shift in income between now and retirement.
Also, keep in mind that this estimate is the amount you'll receive at your FRA. If you're planning to claim early or delay benefits, that will affect how much you actually collect each month.
Checking your estimated benefit amount only takes a few minutes, but it will help you gauge how much of your retirement income will need to come from your personal savings. If you find that you'll be receiving less than you expected from Social Security, it's better to know that sooner rather than later.
3. Understand all the benefits you're entitled to
Most seniors are eligible for retirement benefits, but you could also qualify for other types of Social Security such as spousal, divorce, or survivors benefits.
- Spousal benefits: You could be entitled to spousal benefits if you're married to someone who qualifies for Social Security. The maximum you can receive is 50% of the amount your spouse can collect at his or her FRA. If you'll be receiving more than that based on your own work record, you won't qualify for spousal benefits at all.
- Divorce benefits: If you were previously married to someone who is entitled to Social Security, you could collect divorce benefits. Your marriage must have lasted for at least 10 years, and you cannot currently be married. Like with spousal benefits, the most you can collect is half of your ex-spouse's full benefit amount.
- Survivors benefits: These benefits are for family members of a deceased relative. They're generally reserved for widows and widowers, but sometimes they're also available to parents, children, divorced spouses, and other family members. Exactly how much you'll receive depends on your situation, but widow(er)s can often receive their spouse's full benefit amount in survivors benefits.
In some cases, you may receive these types of benefits in addition to your own monthly payments based on your work record. It pays, then, to ensure you're collecting everything you deserve.
Social Security can be confusing at times, but millions of seniors depend on their benefits to make ends meet in retirement. By taking a few steps now to ensure you're as prepared as possible, you can maximize your income and enjoy your senior years more comfortably.
