Millions of seniors today rely on Social Security to pay the bills — and you may think the time has come for you to join their ranks. But before you go out and file for benefits, make sure you can answer these important questions.
1. What’s my full retirement age?
Your full retirement age, or FRA, represents the age at which you can claim your monthly Social Security benefit in full. FRA is not your only option for taking benefits. You’re allowed to sign up as early as age 62, but for each month you file ahead of FRA, your benefits will be reduced on a permanent basis. You can also delay your filing past FRA, and for each year you do, your benefits will grow by 8%, up until you turn 70.
Choosing the right Social Security filing age is important, as it will determine how much monthly income you collect from the program throughout retirement. As such, you can’t make that call until you know your FRA. And if you don’t, you can consult this table to figure it out.
Year of Birth
Full Retirement Age
66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months
1960 or later
2. What monthly benefit am I looking at?
Knowing your FRA is a crucial step on the road to claiming Social Security, but so is knowing what monthly benefit you can expect. And the good news is that the Social Security Administration (SSA) will tell you. All you need to do is create an account on the SSA’s website, and from there, you can access your annual earnings statements, which include an estimate of your monthly benefit (those statements will come to you in the mail if you’re at least 60 years old).
The closer you are to retirement, the more accurate your benefits estimate is apt to be, since it’s based on your personal wage history. If you’re 59, the number you see may be more reliable than if you’re 38 and still have more than half your career ahead of you. But getting that estimate is important, because it’ll help you see what your benefit will look like if you file at different ages.
3. How much income am I looking to have Social Security replace?
If you’re an average earner, Social Security will replace about 40% of your former paycheck. But most seniors need to replace about 70% to 80% of their former income to live a comfortable lifestyle. If you’re short in the savings department, then you may want Social Security to replace more of your income — in which case delaying benefits is your best move.
After spending your entire career losing a chunk of your wages to Social Security taxes, you may be eager to collect the benefits you’re entitled to. But before you sign up for those benefits, make sure you can answer these questions. Once you lock in your monthly benefit, you’ll generally be stuck with it for life (unless you’re able to undo your filing, which is easier said than done), so it’s a decision you’ll really want to get right.
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