One of the nicest things about Social Security is that you get a choice when it comes to claiming benefits. Once you turn 62, you can sign up for Social Security at any point — though there's no financial incentive to delay your filing past the age of 70.
You should also know that you're entitled to your full monthly Social Security benefit based on your earnings history once you reach full retirement age, or FRA.
That age is 67 for anyone born in 1960 or later.
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If you claim Social Security early — meaning, before FRA — you'll have to accept a reduced benefit. And the earlier you sign up, the more of a reduction you'll face.
On the flip side, delaying your filing past FRA will result in a boosted benefit for life. And the longer you delay, up until age 70, the higher a boost you'll get.
But landing on the right Social Security filing age can be tricky since there are pros and cons to each option. So you may want to run through these questions before making that call.
1. How much savings do I have?
Some people enter retirement with millions of dollars in savings. Others come in with a mere $50,000 in an IRA or 401(k) plan. Figure out what your savings balance looks like, as that might determine when you decide to sign up for Social Security.
If you have plenty of savings to fall back on, you may decide to claim Social Security early and get your money sooner. In that scenario, you can potentially afford a reduced benefit. But if your savings aren't all that robust, then an on-time filing at FRA or a late filing might be better for you.
2. What expenses will I incur during retirement?
You may want to retire in a rural area where housing is inexpensive and you can grow a lot of your own food. Or you may have the goal of retiring in a big city where housing comes at a premium and living costs are high.
Figure out what your dream retirement looks like and how you want to spend your days. If you think you'll need a fair amount of money, then filing for Social Security at FRA or later is probably your best choice. But if you expect to maintain a frugal lifestyle, an early filing might work out just fine.
3. Am I still working, and do I want to continue?
If you're still earning a paycheck from your job, you may not need additional income from Social Security just yet. In that scenario, it could pay to delay your filing and let your monthly benefit grow.
On the other hand, it may be that you're currently working but don't wish to continue much longer because your job is stressful and makes you unhappy. In that case, claiming Social Security could be your ticket to leaving a demanding job and getting to do something you enjoy a lot more.
It's not an easy decision to make
Your Social Security filing age will determine how much money the program pays you every month, so it's important to get that decision right. Answering these questions could make it easier to choose your filing age — and land on a choice you don't regret.
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