The decision to apply for social security is not easy to make. This is because your application age will affect the amount you receive from the program each month.
The earliest age you can sign up for benefits is age 62. However, you are not entitled to your full monthly benefit based on your earnings history until you reach full retirement age or OFF. OFF starts at 66, 67 or 66 and a certain number of months, depending on when you were born.
Now you may have your reasons for demanding Social Security in front of FRA. Maybe your health is bad and you are no longer able to work full time. Or maybe you want to use these benefits to pay for travel at an age where you are still young enough to enjoy it the most.
For some people, requiring social security early is the right call. But if you are going to go that route, it is important to know these specific rules.
The lower benefit you lock in will be the benefit you are stuck with for life
Some people think that if they demand social security early and get a lower monthly benefit in the process when they reach OFF, their benefit will be restored to its full amount. But that’s not how the program works at all. If you apply for Social Security before OFF, you will be stuck with the lower monthly benefit you lock in forever (not including the annual boost you can get as cost of living adjustments are applied across the board).
Now there is one exception. If you withdraw your social security claim within a year and repay all the benefits you received within the same time frame, you can cancel your application and re-enroll at a later age. However, repaying up to one year of benefits is not an easy thing to do, so if you need to report early, assume that the monthly benefit you start with is the one you will always collect.
2. You can have some benefits withheld if you work and earn too much
When you reach OFF, you can earn any amount and not make it affect your social security benefits. However, if you work and collect social security before OFF, you risk having some benefits withheld if your income exceeds the annual earnings test limits.
Now these limits change every year. This year, you can earn up to $ 19,560 without getting benefits affected. From there, you risk withholding $ 1 in Social Security for every $ 2 you earn.
If you reach FRA this year, that limit will rise to $ 51,960. From there, you risk withholding $ 1 in Social Security for every $ 3 you earn.
3. Your lower benefit may result in lower survivor benefits for your spouse
If you have a spouse that you expect to survive for many years, you may want to think twice before claiming social security early. If you lock in a lower monthly benefit, you will leave your surviving spouse a lower monthly benefit for the rest of your life.
If your spouse now had a high income and is therefore entitled to a generous social security benefit, this may not be a problem. But it is something to think about if you are the higher wage earner.
Know the rules
It’s great that you get choices when it comes to requiring social security. However, if you need to apply for benefits early, make sure you are fully aware of the rules that apply.
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