Social Security will most likely end up playing a big role in your retirement finances. So, signing up for benefits at the right time is important because your filing age will help determine how much monthly income you get from the program throughout your senior years.
You may be thinking of signing up for Social Security once the new year arrives. But is that the right move? Or should you hold off? Ask yourself these key questions to find out.
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1. Am I reaching full retirement age in 2024?
Full retirement age (FRA) is the age at which you're entitled to receive your complete monthly Social Security benefit based on your personal wage history. FRA is not the same for everyone. Rather, it hinges on your year of birth.
If you were born in 1958, your FRA is 66 and eight months. So, it may be that you'll reach FRA at some point in 2024.
If you were born in a later year, you might still be allowed to claim Social Security in 2024 because you're entitled to start taking benefits once you turn 62. However, filing for Social Security before reaching FRA means reducing your monthly benefit for life. If you don't like that idea and won't reach FRA until after 2024, you may want to wait to file your claim.
2. Do I plan to be working still in 2024?
You may be entitled to your full monthly Social Security benefit at some point in 2024. But if you're still working at that point, delaying your filing could be advantageous if you don't need the money right away.
For each year, up to age 70, you delay your Social Security claim, your monthly benefit gets to grow by 8%. Any boost you snag by postponing your claim is a permanent one. So, if you're planning to continue collecting a paycheck in 2024, you might as well sit tight on Social Security since, conceivably, you'll be able to pay your bills without it.
3. Am I happy with my retirement savings?
We just learned there's a financial incentive to delay Social Security, even once you've reached FRA. If you're unhappy with how much money you have in your retirement plan, that alone is a good reason to hold off on filing for benefits.
Before you gear up to claim Social Security in 2024, see what your 401(k) or individual retirement account (IRA) balance looks like. If it leaves much to be desired, consider delaying your filing to get more money out of Social Security. That could compensate for the smaller withdrawals you may be limited to from your nest egg.
Filing for Social Security may be part of your 2024 plans, but before you make your claim official, address these important points to ensure that's really the best move. You may come to realize that if you sign up for Social Security in 2025 instead, that one-year delay will make a huge difference in the grand scheme of your retirement income.
