If you are looking forward to the day when you claim Social Security benefits, you’re probably already aware that you can start your checks as soon as you hit your 62nd birthday.
While this is considered an early claim and will result in a reduced benefit, that may not matter much to you since Social Security is designed to equalize lifetime benefits for early and late claimers. Someone who begins payments at age 62 receives more checks than someone who delays, but a person who waits to claim can increase their monthly check amount until age 70. They’d get a larger payment each month, even though they’d receive fewer of them.
Before you start your benefits, though, there is a certain milestone you’ll likely want to make sure you hit — and this is a feat you could achieve at different ages, since it depends on when you personally began working and how many years you put in.
Don’t claim Social Security until you’ve done this
In general, whether you plan to claim Social Security early or late, the one thing you’ll want to make sure you’ve done before filing for benefits is work for at least 35 years.
Why 35 years? It’s simple. The Social Security benefits formula is designed to give you benefits that equal a percentage of your average wages during the 35 years your earnings were the highest (after adjusting your earnings for wage growth).
If you have not worked for a total of 35 years, Social Security doesn’t change the formula. You can still get monthly payments as long as you’ve worked for 10 or more years and earned a sufficient number of work credits in that time. But with a work history that doesn’t span 35 years, you end up with smaller benefits because your average wage is still calculated over that time period.
If you work just 30 years, for example, then the Social Security Administration is going to calculate your wages at $0 for the remaining five years included in your benefit formula. And including many, or even any, years of $0 wages when determining average earnings is going to end up reducing the size of your benefit check.
For this reason, if you are planning to get Social Security based on your own work record, rather than to claim survivor or spousal benefits, you should aim to — at a minimum — fulfill the milestone of a 35-year career before beginning benefits.
Should you work more than 35 years?
While 35 years is the minimum period you should aim to work, you may not want to hand in your notice right away after hitting that target. That’s because, if you’re like most people, there are probably some years in your career when you didn’t earn much.
If you’ve increased your salary and are now making more than you did in any of your earlier work years (on an inflation-adjusted basis), your smartest move may be to work even longer. Each higher-earning year that you can rack up to push out an earlier year when you made less will result in more monthly Social Security money.
Since your retirement benefits will likely play a key role in helping to support you once paychecks stop coming, it may be worth a little extra time earning a paycheck so you’ll have more money to enjoy in your later years.
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