Seniors don’t all have to apply for Social Security at the same age. On the contrary, you are given a choice. You can apply for benefits from the age of 62, or you can postpone your application until the age of 70. Technically, you can claim benefits after age 70, but since there is no financial incentive to go this way, 70 is generally considered the latter. age to register.
Full retirement age is between the ages of 62 and 70. FRA depends on your year of birth and is 66, 67 or somewhere in between.
Claiming benefits for FRA means signing up early. And while you certainly can, here are a few things you should know if that’s the road you’re considering taking.
1. You can reduce your monthly benefit by up to 30%
The Social Security Administration (SSA) won’t just give you early benefits for nothing in return. For each month you claim them before FRA, they are reduced by a certain percentage.
If you only apply for Social Security a year before FRA now, you will lose about 6.67% of your benefits. But if you file a return five years earlier, you get a 30% hit. And that’s pretty substantial, especially if you don’t have a larger nest egg to complement those benefits. Make sure you understand how much monthly income you could lose before claiming benefits before FRA.
2. Your benefit will not be fully recovered once you reach FRA
You may be tempted to take your benefits early at a reduced rate and wait for your full benefits to recover once you reach FRA. But that’s not how social security works.
If you apply for benefits before FRA, you generally keep that lower benefit for life. And so if you decide to sign up at age 62 and cut your benefit by, say, $450 a month, you won’t get that $450 back in your benefit to FRA.
3. You can cancel your application if you regret your early registration
In general, claiming Social Security early means you’ll be stuck with a lower benefit for the rest of your retirement. But there’s a way around it.
The SSA gives all filers one chance at a takeover. If you apply for benefits early, but regret your decision afterwards — especially once you see how small your benefits eventually become — you can undo your application within 12 months and reclaim Social Security at a later date.
But there’s a catch, and it’s that you also have to repay the SSA every dollar in benefits it paid you to start with a clean slate. If you regret filing for the first eight months after doing this, but you’ve already spent the benefits you received, then you may be out of luck.
Think carefully before submitting early
In some cases, it’s a smart move to claim Social Security before FRA, such as if you plan to use the money to start a business, or if you’ve saved so much for retirement that you’ll get a 30% discount. on your benefits does not hurt you at all. But for many seniors, filing early will end up being a bad choice — one that leads to many years of financial stress. And so if you’re considering applying for benefits early, it’s important that you understand exactly what that means.