One of the most outstanding features of Social Security is that we can start claiming at a time that suits us. After reaching 62 years of age, we can have an opportunity to boost our income. However, it’s this same flexibility that scares some people…perhaps you fall into this category?
After 70, the potential benefits no longer grow, so this is normally the latest point of claiming. Therefore, this offers a window of eight years in which you can start claiming Social Security benefits.
If you didn’t know, your top 35 years of earnings will contribute to your salary history, which, in turn, decide your monthly retirement benefit. Yet, this benefit is only available at FRA – full retirement age. For example, those born between 1943 and 1954 have an FRA of 66. Meanwhile, everybody born after 1960 has an FRA of 67 – those between 1954 and 1960 have an FRA of 66 and either two, four, six, eight, or ten months.
We understand the temptation that comes when you reach 62 – just one small action could increase your income dramatically. Also, there’s an appeal that comes with waiting until 70 years of age. In this guide, we have three benefits of claiming Social Security at your FRA precisely.
It’s Not a Long Wait
Firstly, it’s true that your prospective benefits increase by 8% per year between FRA and 70 years of age. This being said, you might not want to work until 70, and you might not want to wait this long. By claiming at FRA, you don’t reduce your benefits, but you also don’t need to wait too long.
You Won’t Impact Benefits
We mentioned a reduction to benefits, and this is exactly what happens when you start claiming Social Security before your FRA. The reduction is quite a severe one and affects your benefit for each month claimed before your FRA – this is a permanent change. By waiting until your FRA, you’ll enjoy 100% of your scheduled benefits rather than reducing them permanently.
In retirement, you just don’t know how your expenses will fluctuate with healthcare, housing, or even ticking off items in your bucket list. Consequently, it’s best to wait until your FRA and not reduce your benefits.
You’re More Likely to Break Even
Although Social Security often causes confusion (and many headaches too), it’s actually relatively simple. Ultimately, the idea is to pay you an amount of money for the rest of your life regardless of your filing age. If you file before FRA, you still receive payments for life, but the amount is reduced. If you wait until after FRA, you’ll receive fewer payments, but these will be higher.
Over the course of a lifetime, you should receive a similar amount whether you claim early, at your FRA, or late. If you’re currently healthy and you don’t expect to pass away at a young age, one of the best ways to break even is to claim at your FRA (especially if you don’t also expect to live to triple digits!).
What does this mean? Your FRA isn’t an arbitrary number, and it isn’t calculated randomly. Instead, it’s the age at which you’re most likely to break even if you’re healthy and expect to reach the average life expectancy.
Summary
Don’t let the decision of claiming Social Security take over your life – with these three benefits, you see why more workers are choosing to wait until full retirement age to claim Social Security!
