The decision to sign up for Social Security isn’t always easy. That’s because there are different filing ages you can choose from, each of which will impact the amount of money you collect monthly.
You’re entitled to your complete monthly Social Security benefit, based on the wages you earned in your lifetime, once full retirement age (FRA) arrives. That age is either 66, 67, or somewhere in between, depending on the year in which you were born.
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However, you’re allowed to sign up for Social Security as soon as you turn 62. You’ll just have to be prepared to settle for a lower monthly benefit for life since you’re not eligible for your full monthly benefit until you reach FRA.
You’re able to accrue delayed retirement credits by postponing your Social Security filing beyond FRA. This incentive runs out at age 70, though. At that point, there’s no financial reason not to sign up. But if you have an FRA of 67, which is the case if you were born in 1960 or later, and you decide to first file for Social Security at age 70, you’ll snag a 24% lifetime boost to your monthly benefits.
If the idea of a higher monthly Social Security benefit for life sounds appealing, you may be inclined to delay your filing until the age of 70. But there’s one specific situation where that move doesn’t make sense at all.
When you’re claiming a spousal benefit
The option to grow your monthly Social Security benefits exists when you’re filing a claim based on your own earnings history. But the rules work differently when you’re filing for spousal benefits.
If you are or were married to someone who’s entitled to Social Security, you may be eligible to claim monthly benefits based on their record. At most, a spousal benefit can be worth 50% of what your current or former spouse is eligible to receive. And if you want 50% of your spouse’s benefit and not less, you’ll need to wait until you reach FRA to file that claim.
But unlike benefits you claim against your own earnings record, spousal benefits aren’t eligible for delayed retirement credits. As such, there’s no sense in delaying a spousal benefit claim beyond FRA, as doing so won’t leave you with any additional money. All it will do is create a scenario where you’ve waited to get the money you were otherwise eligible for sooner.
Know the rules
There tends to be a lot of confusion about Social Security filing rules, and understandably so. But if you’re gearing up to claim benefits, it’s important to know what your options are and what the rules involve.
The last thing you want to do is file for benefits at the wrong time and regret your decision for many years to come. And it especially pays to read up on the rules for spousal benefits since they’re different for people who are married, versus those who are divorced.
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