Don’t claim Social Security if you can’t answer these 4 questions

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You don’t have to wait until your full retirement age to start receiving benefits

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Eager to claim your Social Security? I understood. You’ve paid your Social Security taxes for decades, and now you’re ready to take what you owe. Still, filing for Social Security benefits isn’t something to do impulsively or without research. Moving too fast can result in less than your income. It can also take away your flexibility to strategically manage your household’s total Social Security income.

Go ahead and get excited to claim Social Security soon. But give yourself a few minutes to answer these four questions before filing your benefits application. That way, you can rest assured that now is really the right time to claim.

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Don’t Let These 4 Social Security Surprises Ruin Your Retirement

1. What is my FRA?

FRA, or full retirement age, is the age you qualify for your full Social Security benefits as calculated from your pay history. Social Security provides your FRA based on the year you were born. You can view these assignments, and find your own FRA, below.

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1943-1954 – 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

You don’t have to wait until you start receiving your FRA benefits. You can claim Social Security at age 62 or until age 70. Doing so, however, will result in an adjustment to your full benefit amount. When you claim before FRA, your benefit is reduced by 30%. Claim after your FRA, and your benefit goes up to 32%.

62. But 3 big reasons to take Social Security benefits

The adjustment, up or down, is calculated from the number of months between your claim date and your FRA. So you will see a small change in your benefit amount by claiming close to your FRA and a big change by claiming too early or too late.

2. Are my earnings records accurate?

Your Social Security benefit is calculated from your income record, which comes from employer reporting. The profit formula is the average of your highest-paying 35 years. (If you have a salary history of less than 35 years, the missing years are included with zero income.)

If the data in your earnings record is incomplete or incorrect, your average will be skewed. This could result in you getting calculated benefits that are less than what you are entitled to.

Fortunately, you can easily review your salary history online. Plus, Social Security has a process to rectify any mistakes.

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To access your income records, create an account on “My Social Security.” Log in and you’ll find lots of useful information, including a link to review your entire income record. What you’ll see is a list of years and related taxes Social Security and Medicare income.

If your data doesn’t look right, collect all the documents you have that contain the correct information. Ideally, you’ll have one or more W-2 forms, tax returns or salary slips. Otherwise, write down the contact information for the employer that paid the relevant income, along with the date you worked there and how much you earned. Then, contact Social Security and ask about improving your record.

3. How much more can I earn by claiming later?

The later you start receiving Social Security, the higher your benefit. There are formulas that drive these changes, but you don’t really need to know math to understand its effect. You can estimate your benefits at any age in the My Social Security portal. Test out the different claiming ages and you’ll see that delaying your benefits increases your Social Security income.

3 Strategies to Actually Delay Social Security

However, there is a price to waiting. A three-year delay in claiming your benefits can increase your income by 20%, but you should have given up three years of income already. To put it in numbers, you can multiply the $1,300 monthly check by $1,560. Your upfront cost will be income you didn’t receive after waiting three years — which sums up to $46,800, or $36, multiplied by $1,300 in months.

You can evaluate this trade-off as the break even point. In this scenario, how long will it take for your higher profit to meet the upfront cost? If the benefit is $260 more each month, you would cover $46,800 over 180 months or 15 years. This makes sense if you plan to live to 90, but not if you expect to be much younger.

4. What is my spouse’s plan for Social Security?

If you are married, the two of you must cooperate on the timing of your retirement benefits claims. Your freedom to be strategic about timing depends on whether you both qualify for benefits on your own salary histories. If you do, one of you may claim for current income early, and the other may delay claiming to support future income.

This Social Security Strategy Is Great for Couples

You will have less flexibility if one of you collects spousal benefits based on the other’s salary history. Typically, the primary income earner must begin receiving benefits before the benefits are available to the spouse. (There is an exception for children under the age of 16 or caregivers with disabilities.)

In addition, spouse benefits are reduced when claimed before FRA, but not increased if claimed after FRA. Given that delaying primary income earner benefits also delays spousal benefits, waiting to claim an FRA can be difficult to justify. You will delay two incomes, but only the primary income earner will see higher income later.

Managing Social Security Today and Tomorrow

You worked for years to earn your Social Security benefits. And now, you can optimize that benefit in much less time, by understanding how time affects your income, verifying the accuracy of your salary history, and making strategic plans with your spouse.

Your Social Security income will be with you for the rest of your life. Now a few simple action items to fix this would be worth the effort.


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