Retirement requires loads of preparation, and one of the most important parts is planning for how Social Security will fit into the picture. Most retirees will rely on their benefits to some extent, and for many, it's a significant source of income.
The more you can plan for Social Security, the better your chances of maximizing your benefits. While the program can be complex and confusing, there's one crucial -- but often misunderstood -- aspect to know before you file.
Your age will permanently affect your benefits
The age you begin claiming benefits will directly affect how much you receive each month.
To collect 100% of the benefit you qualify for based on your work history, you'll need to wait until your full retirement age (FRA) to begin claiming. Your FRA will depend on your birth year, but it's between ages 66 and 67 for everyone.
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If you file earlier than your FRA, you'll receive reduced payments each month. By claiming as early as possible at age 62, your benefits will be lowered by up to 30%. You can also delay benefits past your FRA to earn a bonus each month. You'll receive between 24% and 32% extra each month by waiting until age 70 to begin claiming.
While most people are aware to some degree that their age will affect their payments, many don't know that these adjustments are permanent. In fact, roughly half of U.S. adults mistakenly believe that if they claim early, their benefits will go up once they reach their FRA, a 2023 survey from the Nationwide Retirement Institute found.
In truth, once you file for Social Security, your benefit is generally locked in for life. While you'll still receive annual cost-of-living adjustments , you won't see an increase once you reach your FRA. If there's one move to make heading into retirement, then, it's to choose your claiming age carefully.
When should you start taking benefits?
There are pros and cons to both claiming early and delaying benefits, so there's no single correct time for everyone to file. The best age for you will depend on your unique situation and retirement goals.
If you're looking to maximize your retirement income, delaying benefits may be your best bet. The average retiree collects around $739 more per month at age 70 than at age 62, according to 2023 data from the Social Security Administration. If your savings are falling short, the extra cash you'll collect each month by delaying benefits can go a long way.
On the other hand, perhaps you have a robust nest egg and your main priority is retiring as early as possible. Claiming at 62 can help you retire sooner, as it can provide an extra source of income so you don't need to rely entirely on your savings. If you can get by with smaller checks, filing early can be a smart move.
If you're on the fence about when to claim, filing at your FRA may be the best option. While you won't receive any extra benefits each month, your payments also won't be reduced at all. This can be a smart middle ground if you're having trouble deciding whether to claim early or delay benefits.
Everyone's situation is different, so there's no single best age to file for Social Security. But when you know exactly how your age will affect your benefit amount, it will be easier to make the best decision for your retirement.
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