Taking these steps now can set you up for a more comfortable retirement.
Social Security is a critical source of income for millions of retirees, and you generally only have one chance to claim benefits. Before you file, then, it’s wise to ensure you’re making the best decision.
There’s not necessarily a right or wrong age to take benefits, but the more prepared you are before you file, the better off you’ll be. If you’re planning to start claiming Social Security in 2024, there are three simple moves to make right now.
1. Check your estimated benefit amount
You don’t have to wait until you begin claiming to see how much you’ll receive from Social Security. In fact, you can check your estimated benefit amount online in just a few minutes.
First, you’ll need to create or log in to your mySocialSecurity account. From there, you can check your statements to see an estimate of your future benefit based on your real earnings throughout your career. When you know how much to expect from Social Security, it’s easier to determine whether your savings and other sources of income are enough to make ends meet in retirement.
2. Make sure you know your full retirement age
Your estimated benefit amount on your statements is how much you’ll receive if you file at your full retirement age (FRA). This is a critical figure to know, because when you claim in relation to your FRA will dramatically affect your benefit amount.
IMAGE SOURCE: THE MOTLEY FOOL.
The earlier you file for Social Security, the less you’ll receive in benefits. If you claim as early as possible at age 62, your payments will be permanently reduced by up to 30%. But if you wait until after your FRA to file (up to age 70), you’ll receive your full benefit amount plus a bonus of at least 24% per month.
It’s up to you to decide whether you want to file at your FRA, claim early, or delay benefits. But to make that choice, you’ll first need to know what your FRA is. If you’re unsure, you could end up receiving a different amount than you expect once you start taking Social Security.
3. Consider how your strategy affects your spouse
If you and your spouse are both entitled to Social Security, it’s smart to have a plan for when each of you will claim. One of you may choose to file early, for example, while the other delays benefits to earn those larger checks. Or you might decide to claim at the same time, regardless of your ages.
While it’s not the most pleasant topic to think about, it’s also wise to consider how your life expectancy will affect your decision. If one of you passes away, the other could be entitled to the deceased person’s entire benefit amount in survivors benefits.
If you have reason to believe one of you will outlive the other by many years, it could be a good idea to consider whether the other should delay benefits so that the survivor will receive larger payments later in life.
Social Security can make a major difference in retirement, especially if your savings are falling short. The more planning you do now, the more prepared you’ll be down the road.