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The great thing about Social Security is that actions on your part could result in a higher monthly benefit. You’re entitled to a full benefit that’s calculated based on your earnings record at full retirement age, or FRA. Here’s what that age looks like, depending on your year of birth:
Year of Birth
Full Retirement Age
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 Security Administration.
For each year you hold off on claiming Social Security, your benefit will grow by 8%, up until age 70. That means that by delaying your filing, you could snag a monthly payday that’s 24% to 32% higher, depending on your FRA.
Clearly, there’s much to be gained by going this route. And if you’re entering retirement with a savings balance that’s lower than you’d like it to be, putting off your filing could make a lot of sense.
But there are also certain scenarios where delaying Social Security doesn’t make sense. If these apply to you, you may want to claim your benefits at FRA — or even sooner.
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1. You’ve lost your job and can’t pay your bills
The problem with a late-in-life layoff is that it can be difficult to get hired elsewhere when employers perceive you as being right on the cusp of retirement. To be clear, it’s illegal to not hire someone on the basis of age. But it’s also hard to prove that an employer passed over you because of your age.
As such, if you end up losing your job in your 60s, you might need to file for Social Security to cover your bills. Doing so might mean losing out on a chance to grow your benefits — but that’s better than growing a credit card balance and carrying it forward.
2. Your job is hurting your health
There may come a point when you’re able to keep working, but doing so just plain isn’t good for you. If, come FRA, you feel that your job is causing you undue stress or is putting too much of a physical strain on your body, then it may be time to call it quits before unhealthy repercussions ensue. And if not delaying your benefits makes that possible, so be it.
3. You’ve saved so well for retirement that you can afford a reduced benefit
If you’re entering retirement with a $60,000 nest egg, then you’ll probably need as much money from Social Security as you can get. In that case, it pays to push yourself to delay your filing.
But if you’re coming into retirement with a few million dollars in savings, then it may not make sense to push yourself to hold off on signing up for benefits. If claiming Social Security at FRA makes it possible to retire a bit earlier or enjoy your life more when you’re a bit younger, go for it — because you’ve earned it.
It’s nice that Social Security gives filers the option to grow their benefits. But that doesn’t mean doing so is the best move for you. In some cases, filing sooner is a smarter move — even if it means losing out on that higher monthly paycheck.
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