Struggling for income can ruin your retirement. That’s why it’s so important to make sure you have both additional savings and benefits that provide as much income as possible.
Unfortunately, many people don’t quite understand how their Social Security retirement benefits are calculated, so they end up missing out on some of the money they could get from this program. If you’re one of them, you may regret getting less of this guaranteed lifetime income than you would otherwise be entitled to.
The good news is, by following these three steps, you can make sure you don’t keep complaining about your Social Security choices.
1. Understand your benefits before claiming them
One of the biggest sources of Social Security regret comes from not knowing how these benefits work. In particular, you should understand:
- How your age at which you claim benefits affects the amount you receive: Your full retirement age (FRA) is when you receive your standard benefit. FRA is based on the year of birth and is between the ages of 66 and 2 months and 67 years. Declaring early, which means that you start with a benefit between 62 and FRA, leads to a reduction of the benefit. Late filing between FRA and age 70 results in an increase in benefits. The reduction of an early claim is permanent, so consider this issue carefully before submitting so that you are not surprised by a smaller check than expected.
- All the different types of benefits that you (and your spouse) may be entitled to: You may be entitled to partner or survivor’s benefits if you are married or were married for at least 10 years before your divorce. These can be greater than your own benefit, so make sure you know you can claim them. On the other hand, if you are the largest earner, your spouse can get benefits based on your work record, but only if you file your own benefits first.
2. Work at least 35 years
The benefit you receive at retirement age is based on the average wage over 35 years. Annual wages are recorded and adjusted for inflation. The RSZ then calculates an average wage based on the 35 best-earning years on your record. The benefit is equal to a percentage thereof.
Without a 35-year income history, you can still claim Social Security retirement benefits (as long as you have at least 10 years of work credits). But you have a lower benefit because of a lower average wage as a result of taking about $0 pay years.
If you have a career of at least 35 years, you can avoid regrets if you cut your benefits because of a lower average wage. And if you want to replace a few early years of low income with higher ones later, you may want to work longer than 35 years if you have increased your salary over time.
3. Choose a smart claim strategy
Since an early claim results in a reduced benefit, you can assume that starting your checkups anytime before age 70 will lead to Social Security regrets. But that is not necessarily the case. If you don’t live very long, you may get fewer benefits if you wait — either because your checks don’t start before you die, or because you only get higher checks for a short time before you pass.
Your health status is just one factor that can influence your claim strategy. Your marital status and whether your spouse will be dependent on a partner or survivor’s benefit based on your employment history will also influence this decision.
To make sure you don’t regret your choice of claim, evaluate all your options, coordinate with your spouse, think about your work history, and take the time to make sure the decision you’re making is the right one for you. your personal needs.