9 Checklist Items to Cross Off Before Claiming Social Security

You worked for at least a decade to qualify for Social Security. Congratulations on reaching a major life milestone! Now, your next order of business is applying for those Social Security benefits.

Unfortunately, claiming your Social Security income isn't one of those things you do without planning or preparation. If you don't complete some checklist tasks before claiming, you increase the chances of getting less than you've earned or less than you need. And getting less is not the way to make the most of your senior years.

Here are nine checklist items to cross off before you start filling out that Social Security application.

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Your Social Security benefit is calculated from your earnings history. If some of your earnings are missing or underreported, guess what? You may not receive the full benefit you've earned. That's why it's critical to verify that your earnings have been reported accurately.

The earnings data comes from your employers. Earnings can be missing if your employer reported your pay with the wrong amount, the wrong name, or the wrong Social Security number. Problems can also arise if you've married or divorced and didn't update Social Security.

You can check your earnings record by creating an account online at my Social Security. Once you log in, you should see a section titled Eligibility and Earnings. That's where you'll find the link to review your full earnings record.

If the data's wrong, gather your supporting documentation first. Then contact Social Security to ask for a correction.

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Full retirement age (FRA) is the age you qualify for your full Social Security benefit, as calculated from your earnings. The timing of your Social Security claim relative to your FRA influences your benefit amount. If you claim Social Security before FRA, your benefit is reduced. Conversely, if you claim after FRA, you receive delayed retirement credits that increase your benefit.

Your FRA is assigned to you based on your birth year. If you were born between 1943 and 1954, your FRA is 66. For birth years between 1955 and 1959, FRA is between 66 and 67; it's 66 and two months for those born in 1955, 66 and four months for those born in 1956, 66 and six months for those born in 1957, and so on. If you were born any time after 1959, FRA is 67.

Claiming your Social Security early can reduce your benefit by up to 30%. And claiming late can increase your benefit by up to 32%.

You can easily quantify what that means in dollars and cents in your online Social Security account. While you're there, you can also estimate benefits at any claiming age between 62 and 70.

At first glance, you might love the idea of holding out until you're 70 for a check that's 30% or 32% bigger. Just recognize what you're giving up by waiting. If you delay Social Security from age 67 to 70, you forego three years of payments up front. In theory, the higher monthly benefit should make up for that -- if your health allows you to enjoy the extra income in your 70s and beyond.

Having a sense of your own longevity can confirm whether now is the right time to claim. There are two big questions to think about here. First, will your health allow you to enjoy life later? If the answer is no, that’s a reason to claim now.

Second, will your savings last as long as you do? If you're not sure how long your savings will last, that could be a reason to delay your application to increase your benefit.

You can talk with your physician about your health and longevity. You can also search online for life span calculators. Look for a calculator that considers lifestyle factors like eating habits and exercise. Take care not to provide any personal information online, such as your exact birthday and full name.

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If you're married, have a sit-down with your spouse to strategize on your combined Social Security income. Assuming you both worked, you each should qualify for benefits. Your claiming strategy could involve the two of you applying for benefits at the same time, or one of you filing before the other.

A staggered filing strategy might work if you'd like the household income now, but you also want to wait for a higher benefit. In that case, the higher-income earner could hold off and the lower-income earner could file right away.

If you both feel confident in your finances and are ready to enjoy life without work, then you both might claim your benefits now. And finally, if you want to maximize your household Social Security income, you'd pause your benefits applications and hold out for delayed retirement credits.

The $17,166 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

You can claim Social Security with confidence when you know roughly what your retirement living expenses will be. Often, they're less than the expenses you incur while working -- especially if you've been saving a big chunk of your income to your retirement account.

Expense categories that tend to change in retirement include savings contributions, healthcare, taxes, and transportation. Housing costs may change, too, if you're going to move or pay off a mortgage.

Healthcare and taxes are two expense categories that can trip up retirees. Your healthcare costs are likely to rise in retirement. One Vanguard study from 2018 estimated that a 65-year-old female retiree would spend $5,200 annually on healthcare.

With respect to taxes, know that you will owe income taxes on 401(k) and IRA withdrawals and, probably, on a portion of your Social Security income as well.

If you change your mind, you can withdraw your Social Security application or suspend your benefits. Neither option is seamless, so it's helpful to understand the implications up front.

You can withdraw your application within 12 months of filing. When you withdraw, you must repay the benefits you received, plus any benefits family members received from your earnings record. For most people, repaying several months of benefits is a tall order.

The alternative is to suspend your benefits, but you only have this option after you reach full retirement age. If family members are receiving benefits under your record, their income will also be suspended. On the plus side, you do earn delayed retirement credits while your benefit is suspended.

You can reactivate your benefits at any time, but they'll be automatically reactivated once you are 70.

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For the average worker, Social Security replaces about 40% of working income. That creates a gap that most people fill by tapping their savings.

You can do a quick reality check on your savings using the 4% rule. The 4% rule is a guideline that retirees can safely withdraw 4% of their balance annually. At that withdrawal rate, an account that's invested in stocks and bonds in a 50-50 split should stay solvent for 30 years or more.

Multiply your savings balance by 0.04. Add that to the annual benefit you expect from Social Security. You can then compare the total to your retirement budget. That'll give you quick feedback on whether your current Social Security benefit is enough.

You do need identity documents to apply for Social Security. Locate your Social Security card, original birth certificate or proof of citizenship, any military service papers, and a copy of last year's W-2. Keep those in a safe place so they're handy when you apply.

You may also need to provide dates you were married (to your current or former spouse), service dates if you were in the military, employment information for the past two years, and your bank account details.

The $17,166 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

A bit of preparation before you claim Social Security is valuable and worth the effort. The review of your earnings history helps you get what you've earned. Knowing your FRA and its implications can help you weigh the pros and cons of claiming now versus later. Your health, your spouse's benefit, your living expenses, and your savings balance may influence your timing as well.

Ultimately, you'll still claim Social Security when it feels right. And because you didn't jump in spontaneously, you should feel confident in your decision -- and ready to tackle life's next big milestones.

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