Reading up on Social Security is most likely not your idea of a fun afternoon. And who could blame you?
But if you don’t take the time to learn about Social Security, you could end up making a big mistake that hurts you financially once the time comes to claim benefits. Here are a few such blunders you might make accidentally — but regret after the fact.
1. Getting your full retirement age wrong
The Social Security benefit you’re entitled to during retirement will hinge on your personal wage history. From there, you can claim your full monthly benefit at full retirement age, or FRA.
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Many seniors assume that FRA is age 65, since that’s when Medicare eligibility begins. And to be fair, that can be confusing, because you actually go to the Social Security Administration’s website to sign up for Medicare, at which point you’re asked if you want to claim Social Security simultaneously.
But actually, FRA doesn’t kick in for at least another year beyond initial Medicare eligibility. And depending on your year of birth, it may not kick in for two years.
Meanwhile, if you file for Social Security before reaching FRA (you can do so beginning at age 62), your monthly benefit will be reduced on a permanent basis. And so if you don’t want that to happen, you’ll need to know when you’re entitled to claim those benefits in full. You can consult this table to get your FRA:
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.
2. Waiting too long to claim benefits
Filing for Social Security before reaching FRA will result in a reduction in benefits. But delaying your filing past FRA will have the opposite effect — your benefits will get a nice boost to the tune of 8% per year you hold off.
Once you turn 70, though, you can’t accrue the delayed retirement credits that result in a higher benefit. And so there’s no sense in delaying your filing past that point. If you do, you could end up losing out on money you’d otherwise be entitled to.
3. Delaying a spousal benefit
If you’re claiming Social Security based on your own earnings record, then delaying your filing past FRA could result in a higher monthly benefit for life. But that’s not the case with a spousal benefit.
If you’re claiming benefits off of a spouse or former spouse’s record, there’s no sense in delaying your filing past your own FRA, because that benefit isn’t eligible for a boost. Rather, the maximum spousal benefit you can qualify for is 50% of the benefit your current or former spouse receives.
Know the rules
Social Security has a lot of nuances, and it’s hard to keep track of all of them. But at the very least, do make a point to commit your FRA to memory and learn how delayed benefits work. Getting a handle on those key points could make it so you’re more likely to file for benefits at the right time — and get the most out of Social Security.
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