Are you turning 62 this year? Know these essential Social Security rules | personal finance

(Maurie Backman)

Age 62 is a pretty big retirement milestone. That’s because it’s the earliest age you’re allowed to apply for Social Security. It also happens to be a popular age for seniors to claim their benefits.

If you are thinking of registering Social Security As soon as you can, it’s important to understand the implications of that decision. And it means getting familiar with these essential Social Security rules.

1. You could end up with lower benefits if you don’t have a 35-year work history

If you started working in your early 20s, you may have 35 or more years of work under your belt at that time. 62 years rolls around. But if you took a long break from your career, for example to raise children, or if you didn’t start your career until your 30s because you spent more time studying, then you may not have a 35-year work history. years at the moment. the moment she turns 62.

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Why is that important? The monthly Social Security benefit you’re entitled to in retirement is calculated based on your highest-paid 35 years in the workforce. What this means is that for every year in the top 35 in which you have no recorded earnings, you will have a $0 factor in the calculation of your benefits.

Too many $0, or even just one $0, could leave you with a lower monthly benefit for life. And if you expect to rely heavily on Social Security in retirement, that’s not a good thing.

2. It could reduce your lifetime benefits if you claim too soon

While you can certainly enroll in Social Security starting at age 62, that’s not when you’re entitled to your full monthly benefit based on your earnings history. To get that full monthly benefit, you’ll have to wait until you reach full retirement age, or FRA, to apply.

FRA depends on your year of birth. If you turn 62 this year, that means your FRA is 67. So if you apply for Social Security at age 62, you’ll end up with a benefit that’s 30% lower than it could have been.

3. Benefits could be withheld if you apply while you are still working

The Social Security Administration will allow you to work and collect benefits at the same time. But if you do it before you get to the FRA, you risk having some benefits withheld if you make too much money.

This year, you can earn up to $19,560 without affecting your benefits. After that, $1 will be withheld from Social Security for every $2 you earn over that limit.

Now those withheld benefits will eventually be returned to you, specifically, once you reach FRA. But remember, you’ll also secure a lower monthly benefit by virtue of claiming Social Security at age 62. And it may not be worth doing if you’ll be working and have some benefits withheld because of high enough income.

know the rules

Many seniors file for Social Security once their 62nd birthday rolls around. That’s not necessarily a bad choice. But it’s important to understand these rules before you make that call.

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