Social Security is a cornerstone of most Americans' retirement plans, yet a lot of people are still confused about how it works. One potentially dangerous misconception is that your Social Security checks increase once you reach your full retirement age (FRA).
This might happen for some people, but it's not something every senior should expect. Here's a closer look at whose checks might get a boost over time and why.
What's your full retirement age, anyway?
Before we dive into all that, you need a basic understanding of full retirement age (FRA)and how it affects your checks. The government assigns everyone a full retirement age based on their birth year. Here's a table that can help you find yours:
Full Retirement Age
1943 to 1954
66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months
1960 and later
You have to wait until this age to sign up if you want the full Social Security benefit you've earned based on your work history. You can start sooner, but every month you claim benefits below your FRA shrinks your checks. Those who start immediately at 62 only get 70% of their full benefit per check if their FRA is 67 or 75% if their FRA is 66.
Every month you delay benefits increases your checks by anywhere from 5/12 of 1% to 2/3 of 1% until you reach your maximum benefit at 70. That's 124% of your full benefit per check if your FRA is 67 or 132% if your FRA is 66.
Who gets a boost at their full retirement age?
Technically, everyone will most likely see their checks rise during the year they reach their FRA. Benefits will increase every other year due to cost-of-living adjustments (COLAs). These are annual adjustments the Social Security Administration makes to help the buying power of Social Security keep up with inflation. But while you're technically getting more, that money's probably not going to go any further than your smaller checks from years past.
Some people do see notable increases in their benefit checks once they hit their FRA, and that's because they've previously had money withheld due to the Social Security earnings test. This only applies to those who claim Social Security while they're still working and are under their FRA.
Those who are under their FRA for all of 2022 lose $1 from their Social Security checks for every $2 they earn over $19,560 due to the earnings test. And those who'll reach their FRA this year lose $1 for every $3 they earn over $51,960 if they reach this amount before their birthday. But the Social Security Administration doesn't keep this money forever.
When you reach your FRA, the government recalculates your benefit and gives your checks a small boost to make up for the money it withheld from you previously. How much more you'll get depends on several factors, including how much you had withheld in past years.
But if the Social Security Administration never withheld any money from you, you shouldn't expect a boost at your FRA. You'll continue receiving the same-size checks as before with small annual COLAs.
So how do you get more from Social Security?
If your goal is to get the most money from Social Security overall, you need to choose your starting age carefully. For those with short life expectancies, claiming early usually results in the largest lifetime benefit. If these individuals were to delay, there's a chance they could miss out on benefits altogether.
Those who plan to live into their 80s or beyond should consider delaying benefits if they can afford to do so. It means they'll get fewer years of checks, but over several decades, the larger benefit amount can lead to a bigger lifetime total.
If you can't afford to delay benefits or you choose not to, that's fine. Just remember, you probably won't get any extra money at your FRA. So make sure you have enough personal savings on hand to cover what Social Security doesn't.
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