In an ideal world, you'll reach retirement with a decent chunk of money saved up. In reality, though, you may not have as much savings as you'd like, making you more reliant on Social Security to cover your senior living costs.
Social Security pays the average recipient $1,907 a month today. But your monthly benefit may end up looking different. That's because that benefit will hinge on your personal wage history -- specifically, the amount of money you made during your 35 most profitable years in the labor force.
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But there's another factor that will determine how much money you get from Social Security on a monthly basis, and it's your filing age. Once you turn 62, you can claim Social Security at any time. But if you don't want your monthly benefit to be reduced, you'll have to wait until full retirement age, or FRA, to claim it.
FRA isn't the same for everyone, though. So you'll need to make certain you know what yours looks like before you make plans to sign up for Social Security.
Make sure you know your FRA
FRA is based on your year of birth, and you can consult this table to see when your FRA arrives:
|
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.
Now just as you're allowed to sign up for Social Security prior to FRA, so too are you allowed to delay your claim past FRA for a higher monthly benefit -- for life. For each year you hold off, in fact, that benefit gets an 8% boost. However, once you turn 70, there's no longer a financial incentive to delay your Social Security claim. So at that point, you might as well sign up.
What's the optimal filing age for you?
It's important to know your FRA before you sign up for Social Security. But now that you have that number committed to memory, the question remains -- when should you claim your benefits?
The answer there should hinge on different factors, including:
- Your savings level. If you don't have a very large nest egg, a delayed filing could make sense.
- Your work status. If you're still holding down a job and don't mind it, plugging away a bit longer and then filing for Social Security could mean scoring a larger benefit. Plus, if you work and collect Social Security before FRA, you'll be subject to an earnings-test limit.
- Your health. If it's very poor, an early filing might lead to more lifetime income for you.
- Your spouse. Your spouse may want you to claim Social Security at the same time they do so you can retire together. They may also be waiting for you to sign up for Social Security so that they can claim spousal benefits.
Think through each of these points very carefully when weighing your options so you're more likely to make a solid choice.
All told, there's no right or wrong age to sign up for Social Security. But either way, it's a decision you can't make without knowing your FRA.
