When you decide to start getting Social Security payments can have a big effect on how much money you have in retirement. Social Security gives you a steady income that keeps up with inflation, which is a solid base for your retirement plan.
Important Ages for getting Social Security
The age at which you can get the full amount of Social Security is called your Full Retirement Age (FRA). This age used to be 65, but for most people born after 1960, it has slowly gone up to 67.
You can start getting rewards as early as age 62 or as late as age 70, though. The catch is that your monthly payment will be less if you start early.
If you start at age 62, your benefits will always be less, so you will always have less money.
You can increase your monthly income by up to 8% per year after FRA if you wait until you are 70. This is possible because of “retirement credits.”
In other words, your monthly price will go up the longer you wait.
Ability to think again
You don’t have to stick with the decision you made if you claimed benefits early but then changed your mind.
If it’s been less than a year, you can cancel your claim and pay back the benefits you got. This will start the clock over from the beginning.
“Claim-Suspend-Restart” (CSR) is a little-known plan for people who have been retired for more than one year. It lets you stop payments at FRA, build up retirement credits for up to three years, and then start back with a higher benefit.
Reasons why People often File Early
About 27% of people start getting Social Security at age 62, usually because they need the money or the help with personal matters:
- Concerns about your health: If you think you will live less long, an early claim may make more sense.
- Unplanned Early Retirement: Some people have to leave earlier than planned because they were laid off, and they start getting benefits to cover their costs.
- Lack of Emergency Savings: If you don’t have any emergency savings, Social Security can give you cash right away.
- Costs of health care: A lot of people use early benefits as a way to get ready for Medicare, which starts at age 65.
- Good for young children: Claim early if you have young children living with you so they can get a benefit.
- Opportunities for Investment: Some people claim early to invest their Social Security in order to beat the SSA’s rate of growth.
- Problems with the ability to pay for Social Security: A lot of people in the US are afraid that Social Security will run out of money.
- Giving care: If you quit your job to take care of a sick family member, you may be able to get your money back right away.
- If you are healthy and have enough money, waiting until age 70 can give you the most total benefits and make you more protected against inflation.
People who can stop getting benefits after FRA and look forward to bigger payments later may find the CSR plan useful.
Conclusion
When you should start collecting Social Security relies on your health, your financial situation, and the way you live your life. If you can put off getting benefits, your fixed monthly income for life will go up. A late start, on the other hand, might be best for people who need cash flow right away. Because you can change your plan, you can adapt as your retirement needs change.
Source: When can I claim Social Security benefits? This is the exact age