Filing for Social Security isn’t a decision to take lightly. While your benefits themselves are calculated based on your average monthly wage, adjusted for inflation, during your 35 highest-paid years in the workforce, the age you file at will also dictate how much money you receive from the program every month.
Now that 2021 is rolling along, you may be wondering if this is the right year to sign up for benefits. Here’s what you need to know.
You can file for benefits if you were born in 1959
The earliest you can sign up to collect Social Security is age 62. Incidentally, that happens to be the most popular age to file for benefits. But there’s a downside to filing at 62 — you’ll slash your monthly payments for life.
You’re only entitled to your full monthly Social Security benefit based on your wage history once you reach full retirement age, or FRA. FRA is based on your year of birth, as follows:
| 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 |
As you can see, if you were born in 1959, your FRA is 66 and 10 months. If you claim your benefits at age 62, you’ll reduce them by almost 30% on a lifelong basis. And that’s a hit you may not be able to afford.
You may want to file if you were born in 1955
For anyone born in 1955, FRA is age 66 and two months. If you’ll be reaching FRA this year, that could be a good time to claim benefits. That said, you don’t have to file for Social Security as soon as you reach FRA. You could instead opt to delay your benefits all the way until age 70, and for each year you do, you’ll increase them by 8%. That increase will then be yours to enjoy on a permanent basis.
You shouldn’t delay your filing if you were born in 1951
If you were born in 1951 and are therefore turning 70 this year, and you haven’t yet claimed Social Security, you should definitely make plans to do so. While delaying your filing until the age of 70 makes sense, once you reach 70, your benefits no longer grow. As such, there’s no financial incentive to delay further, and if you wait too long, you could wind up losing out on money that should be yours.
If you’ve already turned 70 this year and didn’t sign up for benefits right away, don’t sweat it. The Social Security Administration will pay you up to six months of retroactive benefits, so technically, you can sign up at age 70 1/2 and not lose out on any money. But a better plan is to just coordinate your filing so you start receiving those benefits right when you turn 70. After all, it’s money you’re entitled to.
Is this your year to sign up for Social Security?
You may decide to sign up for Social Security this year even if you don’t fall into one of the age categories above. For example, if you’re turning 65 this year, you may choose to start taking benefits in conjunction with your Medicare enrollment. No matter how old you are, know your FRA and understand the repercussions of filing for Social Security at different points in life. Having that knowledge will ultimately help you arrive at the best decision.