You are entitled to your full monthly social security benefit based on your personal salary history when you reach full retirement age, or OFF. That age is either 66, 67 or somewhere in between, depending on what year you were born.
However, you certainly do not have to wait for FRA to sign up for benefits. You are allowed to claim them as early as age 62.
The benefit of applying for Social Security prior to FROM is clear – you get your money faster without having to wait. But there is a very big downside and that is cutting back on the monthly benefit for life.
To give you an idea of what type of income you might be looking at, let’s say you’re entitled to a monthly benefit of $ 1,700 to a FRA of 67. Applying at age 62 will reduce that benefit by 30%, which leaves you with $ 1,190 a month instead. All in all, it’s $ 6,120 in annual income you could end up losing.
Now you can run the numbers and decide that it’s worth cutting back on your social security benefits to get your money when you want it. But before you finally make that decision, be sure to ask yourself an important question.
Will I hurt my spouse?
If you are single, you may be able to base yours Social Security submitting decision on your own needs and no one else’s. However, if you are married, you may want to think twice before claiming social security early – especially if you are the more earning spouse and you expect to pass away well in advance of your spouse.
When you die, your spouse will be entitled to survivors’ benefits from social security. These benefits will be equal to what you collect on a monthly basis. As such, if you choose to claim social security early, you will not just cut back on your own benefit – you may end up cutting back on the benefit that your spouse is going to rely on in your absence.
To be clear, it may be perfectly fine for you to sign up for a reduced benefit early on if your spouse was a fairly high-paid employee and therefore entitled to a decent social security benefit. Or it could be that you have saved a lot of money up for retirement in an IRA or 401 (k) planand so a hit to your surviving spouse’s social security income is not that big of an issue.
The point, however, is that you need to consider the needs of your spouse before making the decision to apply for social security early. In fact, it is a good idea to review your filing options together and make a decision together so that there are no bitter feelings or regrets.
You may end up having to compromise on your ideal application age to address your spouse’s financial worries. But if that’s what it takes to avoid conflicts and help your life partner avoid money-related worries for years, then this is a path well worth taking.