Claim social security early? 2 rules you need to know
Claim social security early?  2 rules you need to know

Claim social security early? 2 rules you need to know

Choosing when to start claiming social security benefits is one of the most important decisions you need to make when you retire.

Age 62 is the earliest you can file and it is also the most popular age to start receiving benefits. Nearly 35% of men and about 40% of women apply for social security by the age of 62, according to a 2020 report from the Bipartisan Policy Center.

Claiming benefits early can be a smart move in some situations, but it is important to ensure that you are also aware of the potential disadvantages. There are a few rules you need to keep in mind before applying early and they can affect your benefit amount along the way.

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1. Your benefits do not increase later

When you claim benefits as early as possible, you receive smaller checks each month. A common misconception, however, is that you start collecting larger payments when you reach yours full retirement age – which is 67 years for everyone born in 1960 or later.

In fact, when you first apply for benefits, your monthly payments are generally locked for life (except for annual cost of living adjustments).

It is therefore important to plan accordingly when choosing what age you want to claim. If you are dependent on a benefit increase later in life, consider whether it might be beneficial to defer benefits for a year or two to charge larger payments each month. Or you can take action increase your savings so you do not have to be so dependent on social security.

2. Your age may affect your spouse’s benefits in the future

If you are married, the age at which you apply for benefits can affect how much your spouse receives along the way. This is because if one of you dies before the other, the surviving spouse will be able to receive the full amount of the deceased spouse in survivors’ benefits.

However, in order to be entitled to these benefits, the surviving spouse’s benefit must be less than that received by the deceased spouse. In addition, the survivor will only receive the higher of the two benefit amounts, not both amounts combined.

Let us e.g. say you receive $ 2,000 a month in benefits and that your spouse collects $ 1,500 a month. If you pass away and your spouse is entitled to survivors’ benefits, he or she will earn $ 2,000 a month – not $ 3,500 a month.

If you have reason to believe that your spouse may be surviving you, consider how the age you claim could potentially affect his or her benefit amount. Claiming earlier results in smaller checks, and if you receive less than your spouse, it means he or she may not be eligible for survivor benefits if you die first.

Do you have to apply for unemployment benefits ahead of time?

While it is not right for everyone to argue early, it is the best decision in some circumstances. If you have a solid pension fund and do not necessarily need the extra money you will receive each month by deferring benefits, it can e.g. give you a quick start to retirement applying as early as possible.

Additionally, if you are struggling with health issues or think you may be facing health issues in the future, it may give you as much time as possible to enjoy retirement if you claim early.

If you are planning to claim social security early, you are not alone. While this may be the right move in many cases, be sure to be aware of how these two rules can affect your monthly payments. By retiring as prepared as possible, you can avoid surprises from social security and maximize your benefits.


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