Most people become eligible for social security benefits at age 62. Some feel that they should claim as soon as possible to “get the most out of” what they’ve paid into social security. Others decide to retire early and claim their guaranteed income as soon as they can.
Claiming social security at age 62 rather than full retirement age (FRA) can result in up to a 30% decrease in social security benefits. On the other hand, choosing to delay benefits past FRA up to age 70 will give you an 8% increase per year in your benefit. This is significant and should not be overlooked.
Are You Retiring Before Medicare?
If you are retiring before Medicare and planning on claiming social security early, you may be spending more than you anticipate on private health insurance. Claiming social security prior to FRA to pay for private health insurance can result in a permanent reduction of social security benefits.
What is Your Spouse Doing?
If there is no immediate income need, consider having the higher-earning spouse delay claiming his or her social security benefit until age 70. Should the higher-earning spouse pass away first, the lower-earning spouse will be able to claim the higher benefit. Waiting until 70 allows the benefit to grow.
Individuals who turn 62 after December 31, 2015 are no longer allowed to claim benefits on their spouse’s work history and then switch to claim on their own work history.
Claiming before your FRA on a spouse’s work history can lead to a lower benefit than claiming on your own history. The benefit may be reduced up to 35%, while claiming early on your own work history can result in a benefit reduction up to 30%.
If you have questions or comments, please feel free to send us a message.
This article was written by Shoreline Financial Advisors. To learn more about us, please visit our website.
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