The Most Important Social Security Chart You’ll Ever See – Community News
Social Security

The Most Important Social Security Chart You’ll Ever See

Most employees know that they will eventually start applying for Social Security benefits, but few people have a good idea of ​​when to start claiming. Some sign up right away at age 62, wanting to get checks for as long as possible, but they don’t always realize that doing so can have unintended consequences.

To get the most out of the program, you need to understand how your timing affects your checks.

Person on laptop looking at smartphone

Image source: Getty Images.

How your age affects the size of your Social Security checks

The government grants everyone a full retirement age (FRA) based on their year of birth. Here’s a table to help you find yours:

year of birth

Full Retirement Age (FRA)

1943 to 1954

66

1955

66 and 2 months

1956

66 and 4 months

1957

66 and 6 months

1958

66 and 8 months

1959

66 and 10 months

1960 and later

67

Data source: Social Security Administration.

You’ll have to wait until your FRA to sign up for Social Security if you want the full benefit based on your work history, but many people don’t.

Many people choose to enroll earlier or even as soon as they become eligible at age 62. This gives you more years of control, but the government will reduce the amount of your monthly benefit, in some cases considerably.

Someone with an FRA of 67 who signs up for Social Security at age 62 will only get 70% of their full benefit by check. That means if you qualify for the $1,560 at 67 average benefit, you would only get $1,092 per month if you signed up once you became eligible.

Things are a little better for those with an FRA of 66. They get 75% of their full benefit by check if they start at 62, but that’s still a pretty significant discount.

Each month you defer benefits, your checks increase by 5/12 of 1% to 2/3 of 1% per month, depending on your age and FRA. Your checks will continue to grow until you reach the maximum payout at 70. This is 124% of the full payout per check for someone with an FRA of 67 and 132% for someone with an FRA of 66.

For someone on benefits of $1,560 at their FRA of 67, deferring benefits to $70 would net them monthly checks of $1,934 — about $840 more than they would get by signing up as soon as possible. But that doesn’t always mean that delaying benefits is the best decision.

Choosing the best time to sign up for benefits

Your starting age will affect the size of your checks, but it’s your life expectancy that ultimately determines how much you get in total from the program. If you don’t need your Social Security benefits to cover your living expenses right away, it’s usually best to apply at the age you think will give you the greatest lifelong benefit.

For those who don’t expect to live long, signing up early is usually the smarter game. Postponement of benefits cannot benefit you if you die before you apply. But for those living in their mid-80s or older, delaying Social Security usually results in a larger lifetime benefit.

Of course, you can’t be sure how long you’ll live, so you just have to take your best guess. If you are generally a healthy person, it is usually smart to plan for a longer life expectancy.

Once you have that best bet, create a my Social Security account and look at the benefit calculator. This will give you an idea of ​​how much to expect from Social Security if you apply at different ages. It uses data from the IRS showing your actual income history to give you personalized estimates, but you can also see how a shift in your income would affect your benefits if you want to.

Write down your monthly allowance for the different starting ages you are considering. Then multiply each of these by 12 to get your estimated annual benefit. Finally, multiply your annual benefit by the number of years you expect to receive benefits to get your estimated lifetime benefit. So if you claim a benefit of $1,560 per month with your FRA of 67, your estimated annual benefit would be $18,720. If you turned 87, your estimated lifetime benefit would be $374,400.

Use this process to find out what starting age would make you the most money. Once you know approximately how much you can expect from Social Security, you can start estimating how much you need to save for your retirement.

But this is not a one-time process. Your retirement plans may change over time, and it’s possible that the government will change Social Security at some point to make it sustainable for future generations. This can affect when you want to start Social Security. There’s just no way to know yet.

The best thing to do is review your Social Security plans every time you review your retirement plan. This should be at least once a year or whenever you experience a major change in your finances. Regular check-ins like this one can help you stay on track even if your Social Security plans change.