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Americans rely on Social Security, and it’s important to make the most of the program. To do so, it’s critical to think about certain key issues before you file for benefits. Otherwise, you can miss out on opportunities that will make your retired life more financially secure. The following questions will get you moving in the right path to consider whether you’re ready for Social Security.
1. Do you understand how the age at which you file will affect your monthly benefits?
You can file for Social Security retirement benefits as early as age 62 or as late as age 70, and the timing of when you file has a big impact on your monthly benefits. For every month before full retirement age that you claim early up to 36 months, the Social Security Administration takes away five-ninths of a percent of your benefits. So if you claim 36 months early, you’ll lose 20% of your full retirement benefit. For every month beyond 36, you’ll lose five-twelfths of a percent. So if your full retirement age is 66 and you claim at 62, you’ll lose a total of 25%.
By contrast, if you wait past your full retirement age to claim your retirement benefits, you’ll get two-thirds of a percent extra in delayed-retirement credits for every month you wait. That adds up to 8% per year, giving you the opportunity to boost what you get from Social Security even further. Note, though, that delayed-retirement credits only apply to Social Security benefits that are based on your own work record — not to spousal benefits you may be eligible for.
2. Do you have to wait for your spouse to get Social Security benefits?
If you’re counting on spousal benefits from Social Security, then you need to understand the special rules that apply to them. The most important is that you can’t claim spousal benefits until your spouse files for retirement benefits. That’s an especially big problem in couples where there’s an age difference, because the older spouse can reach age 62 before the younger spouse is even eligible to claim retirement benefits.
If both spouses have worked, you can always file for your own benefits. Later on, when spousal benefits kick in, you’ll start getting whichever benefit is larger. But for single-earner families, the spousal benefit limitations can be a big problem.