Raleigh, NC – Deciding when to claim Social Security can have a significant impact on your financial well-being during retirement. The timing of your application depends on various factors, such as your monthly expenses and life expectancy. For some individuals, claiming Social Security benefits as soon as they turn 62 may be the best decision, while others may benefit from waiting until a later age.
However, there is one common decision regarding Social Security that many retirees end up regretting. Claiming benefits at 62 results in receiving the maximum number of checks, but this does not necessarily lead to the largest lifetime benefit. The Social Security Administration reduces the monthly benefit for each month benefits are claimed before reaching full retirement age (FRA).
FRA varies depending on one’s birth year, with the full retirement age being between 66 and 67 for most individuals. If an individual claims benefits before reaching FRA, they will experience a reduction in their monthly benefit. This reduction can be as much as 25% for those with an FRA of 66 who claim at 62, and up to 30% for those with an FRA of 67 who claim immediately. This decision may result in significantly smaller checks over the individual’s lifetime.
Despite the appeal of early claiming, with 51% of seniors signing up before their FRA in 2022, a recent Nationwide survey found that more than 2 in 5 retirees regret this decision. However, it is essential to note that early claiming may still be the right decision for some individuals, depending on their circumstances.
Factors such as financial stability, life expectancy, and marital status should be taken into account when deciding when to apply for Social Security benefits. Those who may face financial difficulties by delaying benefits or who have a terminal illness may benefit from claiming early. On the other hand, individuals who can afford to delay benefits until their FRA or beyond, especially if they have a longer life expectancy, may receive significantly larger benefit checks in the long run.
Married individuals and those with dependents may need to consider the impact of their claiming decision on their family members. Spouses and qualifying children cannot claim benefits until the primary worker signs up, so there are additional considerations for those with dependents.
In conclusion, determining when to claim Social Security benefits is a crucial decision that can significantly impact one’s financial security in retirement. It is essential to carefully evaluate personal circumstances and consider various factors before making this decision. Ultimately, seeking professional financial advice may help individuals make an informed choice regarding their Social Security benefits.