Social Security Claim age: When you decide to start getting Social Security benefits can have long-lasting effects on how much money you have in retirement. Social Security gives you a steady income that keeps up with inflation, which is a solid base for your retirement plan.
If you carefully choose the right time to start benefits, you can get the most out of them, helping to cover important costs and keeping you from having to rely on other savings too soon in retirement.
Social Security Claim age
Your Full Retirement Age (FRA) is the age at which you qualify to receive your full Social Security benefits. For most people born after 1960, this age is 67, though it used to be 65. You have the option to start benefits as early as 62 or delay until as late as 70.
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However, starting early means a permanent reduction in your monthly payment. Beginning at age 62, for instance, locks in a lower income because your benefits are reduced for each month before your FRA. Delaying beyond your FRA, up to age 70, can increase your monthly benefit.
However, postponing until age 70 increases your monthly benefit by as much as 8% annually after FRA because of “retirement credits.”
Therefore, your monthly payment will increase as you wait longer.
Flexibility to reconsider
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You are not necessarily bound by your initial decision to claim benefits if you later decide to change your mind.
You can essentially reset your start date by withdrawing your claim and repaying the benefits you received if it has been less than a year.
A little-known tactic known as “Claim-Suspend-Restart” (CSR) enables people who have been with FRA for more than a year to halt payments, accrue retirement credits for a maximum of three years, and then resume with an increased benefit.
Typical justifications for making an early claim
At age 62, roughly 27% of people begin receiving Social Security benefits, frequently due to particular monetary or personal needs:
- Health Issues: An early claim might seem more sensible if you anticipate a shorter lifespan.
- Unplanned Early Retirement: Some people begin claiming benefits to pay for expenses after retiring earlier than anticipated as a result of layoffs.
- Absence of Emergency Savings: Social Security can supply cash flow right away if there are no emergency savings.
- Healthcare Costs: A lot of people use early benefits as a stopgap before enrolling in Medicare, which begins at age 65.
- Benefits for Young Children: Making an early claim may enable your minor children to receive a benefit.
- Investment Opportunities: In an attempt to beat the SSA’s rate of increase, some people file early claims to invest their Social Security.
- Social Security Solvency Concerns: Almost 50% of Americans are concerned that their Social Security benefits may eventually run out.
- Caregiving: Taking time off work to tend to a loved one could result in an early claim for immediate financial support.
Waiting until age 70 can yield the largest lifetime benefit for those who are financially stable and in good health, strengthening their buffer against inflation.
The CSR (Claim-Suspend-Reset) strategy can be helpful for people who can wait to start getting Social Security benefits after they reach Full Retirement Age (FRA). By pausing your benefits and letting them grow, this plan lets you get the most out of your monthly payments.
When deciding when to apply for Social Security, you should think about your health, finances, and way of life. If you can wait, delaying your benefits will make your guaranteed monthly income go up for life. However, people who need money right away might do better by starting their benefits early.
If your retirement plan is flexible, you can change your strategy as your needs change. This way, you can make sure you get the right help at the right time.
