It’s normal to be anxious about signing up for Social Security benefits. You’ve spent decades paying into the program, so of course you want to reap the rewards. But rushing to sign up can actually cost you in the long run. Before you complete that application, take a minute and make sure you know the answers to the three questions below.
1. Why does it matter when I claim Social Security?
The age you claim Social Security at dictates the size of your monthly checks. You can enroll at age 62, but if you want to get the full benefit you’re entitled to based on your work history, you’ll need to wait until your full retirement age (FRA) register. More on that below.
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Each month you delay benefits, your checks increase slightly until you reach 70, when you qualify for your maximum Social Security benefit.
But this does not mean that delaying benefits is always best. You must also weigh your life expectancy and your financial situation. If you don’t expect to live long or can’t pay your bills without Social Security, signing up early is probably smart. Otherwise, you’ll probably get more overall if you wait to sign up.
2. What is my full retirement age (FRA)?
Your FRA is the age at which you become eligible for your full Social Security benefit based on your work history. The government assigns this to you based on your year of birth. For those born between 1943 and 1954, your FRA is 66. It then increases by two months each year until it reaches 67 for adults born in 1960 and later.
Those who choose to enroll in Social Security immediately at 62 only get 70% of their total benefit by check if their FRA is 67 or 75% if their FRA is 66.
Your FRA also affects your maximum benefit. Those with an FRA of 66 get 132% of their total benefit per check if they wait until age 70 to sign up, while those with an FRA of 67 only get 124% of their total benefit per check at 70.
You can find out your FRA and see how much you can expect from Social Security at various starting ages by creating an account at my social security. You’ll need to answer a few questions the first time you create your account to prove your identity, but once you’ve done that, you can create a password to log in again.
3. How will working while claiming Social Security affect my benefit?
It is possible to claim Social Security while you are still working, but doing so may make your benefits subject to the Social Security Earnings Test. This withholds a certain dollar amount from each of your benefit checks if your earnings exceed a certain limit.
If you will be under your FRA for all of 2022, you will lose $1 of your checks for every $2 you earn above $19,560. But if you reach your FRA in 2022, you’ll only lose $1 for every $3 you earn over $51,960 if you reach this amount before your birthday.
The good news is that the money lost in proof of income is not gone forever. Once you reach your FRA, the government recalculates your benefit amount to account for money you previously withheld. That means your future check will be slightly larger. But they still won’t be as big as they would have been if you had delayed Social Security until your unclaimed FRA.
If you don’t need your Social Security benefits to cover your costs, it may be better to wait until you retire to enroll instead of working and claiming at the same time. delay profitseven for a few months, it can make a lasting difference to your paychecks.
Hopefully, the above information wasn’t new to you, but if something surprised you, you’ll probably want to review the tips here and think carefully about when you plan to enroll in Social Security. This can take a bit of time, but it can help you make the most profit possible, so it’s well worth the effort.
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