Older Americans routinely rely on Social Security to cover their living costs in retirement. Chances are, you're planning to do the same.
When it comes to signing up for Social Security, you have options. You could file at your precise full retirement age (FRA), which is either 66, 67, or somewhere in between, depending on your year of birth. You could also sign up for benefits early if you're willing to accept a lower monthly payday in the process. The youngest age to file for Social Security is 62.
On the flipside, you can opt to delay your Social Security filing past FRA. For each year you do, your benefits will grow by 8%, and you'll get to enjoy that increase on a permanent basis.
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However, once you turn 70, you can no longer accrue the delayed retirement credits that result in boosted benefits. So even though you won't be forced to claim Social Security when you turn 70, at that point, there's no sense in delaying further.
But no matter what age you decide on for claiming Social Security, there's one key move you must make before filing for benefits. If you skip this important step, you might end up regretting your decision.
Know what your monthly benefit actually looks like
The amount of money you receive from Social Security each month will hinge on two factors:
- Your lifetime earnings
- Your filing age
But either way, you can't really make an informed filing decision unless you take a look at your most recent Social Security earnings statement and see what your monthly benefit is estimated to be.
If you're 60 or older, you should have received a physical copy of your most recent Social Security earnings statement in the mail. If not, and if you're younger, you can create an account on the Social Security Administration's website and access your most recent earnings statement there.
That statement will not only include a summary of your recent wages, but it will also tell you what monthly Social Security benefit you're in line for. That's an important thing.
Let's say you're convinced you're looking at a monthly benefit of $2,000. If you find out that you're only eligible for $1,800 a month at FRA, that might prompt you to delay your claim so you can score a higher benefit.
Or, let's say you want to retire in your mid-60s, but claiming Social Security is the only way to pull that off. You might assume that you can't afford the hit to your monthly Social Security benefit. But if you see that your estimated benefit at FRA is much higher than you thought it would be, then you may be OK to sign up a year or two sooner if that means getting to close out your career when you're ready to.
Valuable information to have
When you're talking about something as important as signing up for Social Security, it's imperative that you have all the right information. So make sure to get a copy of your most recent earnings statement and see what benefit you're looking at on a monthly basis. From there, you can determine whether it's best to file for Social Security early, late, or right on time.
