Claim Social Security at age 65? You Might Regret That Smart Change: Personal Finance

Smack in the middle of that window is 65 years old. You may assume that this is a good time to register for benefits. But before you make that decision, consider the drawbacks of claiming Social Security at the time.

Age 65 is the time Medicare eligibility begins. And if you enroll in Medicare, you may be tempted to sign up for Social Security at the same time. In fact, you might think that you should Sign up for benefits because you will be using the Social Security Administration’s website to sign up for Medicare online.

But the age of 65 is Not Full retirement age for Social Security purposes. Claiming benefits before the FSA means permanently curtailing them in the process.

If you were born in 1960 or later, your FRA is 67 years old. If you were born earlier, it is either 66 or 66 and a specific number of months.

But let’s say your FRA is 67. If you claim Social Security at age 65, you’d reduce your monthly benefits by about 13.34%. This may not seem like a big deal at first, but it can actually be huge.

Imagine that a 13.34% decrease results in $200 less in Social Security income each month, or $2,400 per year. In case you haven’t noticed, inflation has skyrocketed this year, and in such a case, not having an extra $200 on hand could be financially disastrous.

Then there’s the fact that Social Security will only replace about 40% of your pre-retirement earnings to begin with, assuming you get an average salary. Most elderly people need about twice this income to maintain a decent lifestyle.

If you have a large nest, you may be in a position to cut the benefits by 13.34%. But if your savings are low, you may not be able to afford any kind of damage to your benefits at all.

It can be tempting to claim Social Security in conjunction with your Medicare enrollment, so waiting for the FRA to sign up for benefits could end up being a much better financial move. In fact, if you’re about to retire without a lot of savings, you may want to consider delaying registration after an FRA. For every year you do, up to age 70, your benefits will increase by 8%. And this extra income can make you able to manage your bills without worries.

You should also know that collecting Social Security is Not A prerequisite for obtaining Medicare coverage. If you are not registered for benefits, you will have to pay your Medicare premiums directly, rather than having them withdrawn from your Social Security payments. But this should not be a reason to file early.

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