Here’s how to get an extra 24% of Social Security | Smart Change: Personal Finance
Social Security benefits can lead to retirement or termination for many seniors.
The average 401(k) account balance is about $35,000, according to a 2022 Vanguard report How America Saves, which means Social Security benefits will likely play a major role in many retirement plans for seniors. It is wise then to make sure that you earn as much as possible.
Fortunately, there are ways you can increase the size of your monthly payments. And one strategy, in particular, can boost your advantages by up to 24%.
How does your age affect your benefit amount
The age at which you start claiming Social Security will have a significant impact on the amount you collect each month. The earlier you make the claim, the smaller the checks will be. But by delaying the benefits, you can get a big boost.
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The most important number to know is your full retirement age (FRA), which is the age at which you will receive the full benefit amount based on your employment history. If you were born in 1960 or later, you will have an FRA of 67 years old.
If you have FRA 67 and file it as soon as possible at age 62, your benefits will be reduced by 30%. But if you delay claiming until age 70, you will receive the full benefit amount plus an additional 24% each month.
These modifications are also permanent. A common misconception is that if you file early, the benefits will increase once you reach your HR assessment. In reality, though, the amount of the benefit is generally restricted for life when you begin to claim. By delaying the benefits, you will likely earn bigger checks each month for the rest of your life.
What age should you claim Social Security?
There is not necessarily a right or wrong time to file a Social Security application. Some people may be better off claiming early, others may benefit from waiting a few years, while still others may split the difference and file in their FRA. The right move for you depends on several factors.
- Claim early: This option makes more sense for those who want to get a head start in retirement or have reason to believe they may not live well into their 80s or beyond. If you’re struggling with health issues, for example, you can actually get more over a lifetime by enrolling early.
- Benefits of delaying: Waiting a few years to claim can increase your benefits by hundreds of dollars per month, so this could be a smart move if your retirement savings aren’t enough. Also, if you expect to live a longer than average life, these big checks can go a long way if your savings eventually run out.
- Registering with your FRA: If you’re on the fence about when to file, claiming in the FRA may be the best of both worlds. You will receive the full benefit amount without discounts, but you also don’t have to wait long to start receiving benefits.
Your general financial situation will also play a role in your decision. If you have a strong retirement fund and don’t necessarily need the extra boost in benefits you receive by delaying, there is no harm in claiming as soon as possible. But if Social Security is to be the primary (or only) source of income in retirement, the delay could make the graduation years more financially comfortable.
There is no best age to start claiming Social Security, as it depends on your individual circumstances. But by understanding how your age will affect your benefit amount, it will be easier to make the best decision for your situation.
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