Should You Claim Social Security Before 2022 Wraps Up?

Once you reach the age of 62, you’re entitled to sign up to start receiving Social Security benefits. And many people purposely rush to claim benefits as soon as they’re eligible to get their money quickly.

If you’re already 62 years of age, you may be thinking about filing for Social Security before the end of 2022. But before you go that route, it pays to ask yourself these important questions.

1. Have I reached full retirement age?

Full retirement age, or FRA, is when you’re entitled to your full monthly Social Security benefit without a reduction. FRA is either 66, 67, or 66 and a certain number of months, depending on your year of birth.

As mentioned, you don’t have to wait until FRA to sign up for Social Security. But for each month you claim Social Security before FRA, your monthly benefit will be reduced permanently. So if you’re not at FRA yet, it could pay to wait.

2. Am I still working?

You’re allowed to work and collect Social Security at the same time. But if you do so before having reached FRA, you’ll risk having a portion of your Social Security benefits withheld once your income exceeds a certain threshold.

If you’re not yet at FRA but also aren’t holding down a job, this won’t be an issue. Similarly, if you’re still working but, say, you just reached FRA this month, you don’t have to concern yourself with an earnings-test limit. Otherwise, think about whether filing for Social Security makes financial sense, given the potential to have some of those benefits withheld due to your income.

3. Do I have a decent-sized nest egg?

The more money you have in savings, the less reliant you’re apt to be on Social Security in retirement — and vice versa. And so it’s a good idea to assess your savings before making the decision to file.

Let’s say you have a nest egg that could easily provide you with $80,000 a year of income for a 30-year retirement. You may decide that even if you haven’t reached FRA yet, it still pays to claim Social Security so you can get that money a bit earlier and use it as you want. That’s not necessarily a poor choice, because you might have more than enough money in your nest egg to compensate for a lower monthly benefit for life.

But what if the opposite is true? Let’s say that based on your current savings, you only expect $8,000 a year out of your IRA or 401(k) in retirement. In that case, you may want to consider holding off on filing for Social Security this year if FRA is still a number of years away.

What’s the right call?

Filing for Social Security might land on your year-end financial checklist. That’s not necessarily a poor choice, but it could be. If you run through these questions before submitting your benefits claim, you can approach that decision with a lot more confidence.

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