You may not put much thought into Social Security until you are retired and realize how important these benefits are starting to play in your finances. But anyway, your goal should be to get as much money from Social Security as you can, and you can achieve it through these rules.
1. Do not fill in early
You are entitled to your full monthly Social Security benefit, based on your earning history, once you reach your full retirement age, or FRA – this is not a single age, but rather a range, depending on the year you were born:
|
Birth year |
Full retirement year |
|---|---|
|
1943-1954 |
66 |
|
1955 |
66 and 2 months |
|
1956 |
66 and 4 months |
|
1957 |
66 and 6 months |
|
1958 |
66 and 8 months |
|
1959 |
66 and 10 months |
|
1960 or later |
67 |
Data Source: Social Administration.
You can register with Social Security from the age of 62, but for each month you submit to FRA, your benefits are reduced to what is generally permanent. If you are worried about reducing your benefits, put your FRA in for the memory and make sure you do not submit before you reach this age.
Incidentally, you also get the option to delay benefits beyond FRA. For every year you do, they boost them by 8%, until you turn 70.
Image Source: Getty Images.
2. Not early in retirement
It is possible to leave workers early without actually claiming benefits. If you have a healthy level of retirement savings, you may want to dive into your IRA or 401 (k) to pay your bills without having to file for Social Security.
But early retirement could cut your benefits in a different way. Your benefits are calculated based on your 35 highest years of earnings in your life, but for each year you miss out on income, you will pay a $ 0 in your personal benefits calculation. If you retire early, you can only work at 32 or 33 years old, so before you pull the plug on your career, see how many years of earning you actually have under your belt.
3. Do not wait too long to sign up
There are good enough reasons to delay your Social Security submission until 70. If you do not have much in the way of retirement savings, withholding benefits is a great way to compensate because you have a boost your Social Security Income which stays in place for the rest of your life. But if signing up at age 70 often makes sense, then signing up beyond that point is not.
The delayed retirement credits you have been allocated by applying for Social Security past FRA stop collecting when you are 70, and there is no financial sense in filing beyond that point. In fact, you may end up losing money if you wait too long to submit.
The Social Security Administration will pay you up to six months of retroactive benefits, so if you forget to sign up at 70 but only sign up at 70 1/2, you will have no money. But if you submit at 71, you stand to lose on benefits of half a year for no good reason.
Even if you do not need Social Security to cover your bills when you are a senior, you should still strive to secure as much money from it as you can to fully enjoy the pension. Make sure the above blunders occur – your financial well-being depends on it.
