It is normal to be eager to sign up for social benefits. You have spent decades paying for the program, so of course you will want to reap the rewards. But rushing to sign up can actually cost you in the long run. Before filling out the application, take a minute and make sure you know the answers to the three questions below.
1. Why does it matter when I claim social security?
The age you claim Social Security that dictates the size of your monthly checks. You can sign up as a 62-year-old, but if you want the full benefit you are entitled to based on your work history, you must wait until your full retirement age (OFF) to sign up. More about that below.
Each month you defer benefits, you increase your checks slightly until you reach 70 when you qualify for your maximum Social Security benefit.
But that does not mean that it is always best to defer benefits. You also need to weigh your life expectancy and financial situation. If you do not expect to live long or you can not pay your bills without social security, it is probably smart to sign up early. Otherwise, you will probably get more overall by waiting to sign up.
2. What is my full retirement age (OFF)?
Your FRA is the age at which you will be entitled to your full social security benefit based on your work history. The government grants you this based on your year of birth. For those born from 1943 to 1954, your FRA is 66. Thereafter, it increases by two months each year thereafter until it reaches 67 for adults born in 1960 and later.
Those who choose to sign up for social security immediately at age 62 receive only 70% of their full benefit per year. check if their FRA is 67 or 75% if their FRA is 66.
Your FRA also affects your maximum return. Those with an FRA of 66 receive 132% of their full benefit per. check if they wait until 70 to sign up, while those with an FRA of 67 only get 124% of their full benefit per check. check at 70.
You can find out your FRA and see how much you can expect from Social Security in different starting ages by creating an account at My social security. You will need to answer some questions the first time you create your account to prove your identity, but once done, you can create a password to sign in again.
3. How will working while I require social security affect my performance?
It is possible to claim social security while you are still working, but if you do, it may result in your benefits being subject to the social security earnings test. This withholds a certain amount of dollars from each of your benefit checks if your income exceeds a certain threshold.
If you want to be below your FRA throughout 2022, you will lose $ 1 from your checks for every $ 2 you earn over $ 19,560. But if you reach your FRA in 2022, you will only lose $ 1 for every $ 3 you earn over $ 51,960 if you reach this amount before your birthday.
The good news is that money lost to the earnings test is not gone forever. When you reach your FRA, the government recalculates your benefit amount to take into account the money it previously withheld. This means that your future check will be slightly larger. But they still would not be near as large as they would have been if you had just delayed Social Security until your OFF without making demands.
If you do not need your social benefits to cover your costs, it may be better to wait until you retire, to sign up instead of working and claiming at the same time. Delayed serviceseven in a few months, can make a lasting difference to your checks.
Hopefully the information above was not new to you, but if something surprised you, you will probably want to review the suggestions here and think carefully about when you plan to sign up for Social Security. This may take some time, but it may help you to ensure your maximum benefit so that it is worth the effort.
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