Bloomberg News reports that Americans lose trillions of dollars because they do not claim Social Security benefits when they should. Here’s what you should know before claiming Social Security benefits.
If you need Social Security benefits to meet your daily needs, you should claim them as soon as possible. But, if you can wait to claim them, you will receive higher Social Security income. The difference between taking benefits at 62 rather than at 70 is stark. For example, if your monthly check would be $725 at 62, you could get $1,280 if you waited until 70.
Put differently, if your full retirement age (FRA) is 66 and you can wait until 70 to claim Social Security benefits, you get 32 percent more in monthly benefits for your lifetime than you would if you claim benefits at 66. You get 8 percent more for each year you delay claiming benefits after age 66 up to age 70.
If you were born between 1943 and 1954, your full retirement age (FRA) is 66, though you may claim benefits any time between age 62 and 70. (If you were born in 1955, your FRA is 66 and 2 months; your FRA increases by 2 months each year until 1960 when it is 67.) If you claim benefits at 62, you get 25 percent a month less each month for your lifetime than you would if you waited to claim until you are 66. To learn about how claiming benefits early disproportionately hurts people with low incomes, click here.
Of course many factors go into when you should claim benefits. If you’re in good health and can wait, you will ensure a higher monthly income throughout your life. Moreover, if you’re married and earn more than your spouse, delaying your receipt of benefits, will ensure increased Social Security income for your spouse after you pass. On the other hand, if you’re in poor health, it might be wise to claim benefits early so you are able to get back as much as possible from Social Security.
It’s wise to confirm that Social Security has correct information about your income. You can check online by creating a “my Social Security account” at https://www.ssa.gov/myaccount/. Once you do that, you will get a Social Security Statement that shows the income information Social Security has on file. Let Social Security know right away if you find a mistake.
What benefits does your spouse get? Because Social Security is insurance designed to protect families, your spouse, even your divorced spouse if you were married at least ten years, is entitled to Social Security benefits based on your income. The spousal benefit amount is half of the amount of your benefit if that amount is larger than what your spouse would receive based on his or her own income. And, after you pass, your surviving spouse or divorced spouse if you were married at least ten years, is entitled to your full Social Security benefits if that is larger than the amount your spouse would otherwise get based on his or her own income.
Today, just four percent of people wait until age 70 to claim benefits. More than seven in ten people claim benefits at 62 or 63.
The National Association for Social Insurance toolkit provides questions to ask based on a range of situations in which you might find yourself, including whether you should keep working and claim benefits. To read the toolkit, click here.
NB: On average Social Security replaces only 40 percent of a person’s pre-retirement income.
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