One nice thing about Social Security is that seniors get flexibility on when to sign up. You can file for Social Security starting at age 62. But beyond that age, the choice is yours. So if you get to 62 but you're still working and don't need income from Social Security, you can hold off on filing and snag a higher monthly benefit in the process.
Now the decision to claim Social Security is a very personal one. The right filing age for you may not be the best filing age for your neighbor or colleague. But before you choose your Social Security filing age, there's another age you ought to know.
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Know when your full monthly benefit is yours to claim
While you can absolutely claim Social Security starting at age 62, you won't get your full monthly benefit based on your personal earnings history until full retirement age (FRA) arrives. FRA isn't the same for everyone. It's based on your year of birth and goes as follows:
|
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.
For each month you claim Social Security prior to FRA, your monthly benefit is reduced. Now if you have an FRA of 67 and you sign up for Social Security at 66, you won't face nearly the same hit to your monthly benefit as you would with a filing at age 62. But either way, it's important to know when your FRA is, as that information, coupled with your financial situation, should guide your filing decision.
For example, let's say you're nearing retirement without much savings. You may want to make a point to wait until FRA arrives since you'll probably become quite reliant on Social Security once your career wraps up. On the other hand, if you're sitting on a $3 million nest egg at 62, you may decide to file then and use the money to have fun.
You should also know that it's possible to delay a Social Security claim past FRA. For each month you do, your benefit gets a modest boost up until age 70. Filing at age 70 with an FRA of 67 will result in a 24% bump -- for life.
Will lawmakers make changes to FRA?
The table above is correct as of this writing, and will likely remain correct for the foreseeable future. However, lawmakers may, at some point, consider a change to FRA for workers born in 1960 or later to address Social Security's pending financial shortfall.
At this point, Social Security is at risk of having to cut benefits as early as 2034 if lawmakers don't find a way to address its fiscal woes. One solution could be to push FRA from 67 to 68 or 69 for workers born in 1960 or later. However, so far, that change isn't close to being official.
Still, it pays to keep tabs on Social Security in case FRA shifts in the future. For now, though, keep the above numbers in mind when narrowing down your filing decision.
