[CHART] The Best Time to File for Social Security
Social Security is an incredibly important source of income for retirees.
And there are over 500 different ways to claim your benefit.
Unfortunately, the fine folks at the Social Security Administration aren’t there to help you understand how to maximize your benefit.
They can answer some common questions for you.
But even then, the information they share can be misleading, causing you to make a wrong move.
That’s why today, I’m setting the record straight.
I’ve asked my colleague and retirement coach Beau Henderson to answer questions from readers who received benefit filing tips from the SSA that didn’t necessarily add up.
Let’s dive in…
Two Common Social Security Filing Misconceptions That Could Cost You Thousands
When Social Security was first created, it was never meant to be a major source of retirement income for retirees.
However, in today’s economic landscape it can be 50% of the average retiree’s monthly income.
Plain and simple, filing for Social Security is one of the most important things to understand right now if you want to live a successful retirement.
That’s why today, I’m sharing common misconceptions that could lead you to forgo thousands in retirement benefits…
“I was told I may as well claim my Social Security now at age 66, since there’s no longer a reduction on what I receive. Is now really the best time to file for Social Security?”
The Social Security Administration refers to the age when you can claim 100% of your benefit as “full retirement age.”
So it’s true that if you file at this age, you can collect your full benefit.
But filing at full retirement age doesn’t mean you’re maximizing your benefit.
You’re actually entitled to the highest monthly benefit when you reach age 70 — years after full retirement age.
Each year you delay filing past your full retirement age (up until 70), you’re rewarded with an 8% increase to your monthly benefit.
So you’re actually able to collect more than the full amount you’re due at full retirement age.
And this doesn’t just affect you…
The amount that you receive decides how much your spouse is entitled to receive in Social Security survivor’s benefits in the event of your death.
There are a number of other considerations when it comes to finding the “best time” to file.
But delaying your filing age as late as possible is usually the best way to maximize your benefit over the span of your lifetime.
And that leads us to our next reader question, which is another common misconception about filing age…
“I was told I would receive about the same amount of Social Security over time regardless of what age I file, so my filing age doesn’t really matter. Is that true?”
This misunderstanding does have a basis in truth.
Social Security is designed to roughly pay out the same amount of benefits regardless of age. But we all know not all plans work out as anticipated.
As we just covered, you can claim 100% of your retirement benefit at full retirement age. And if you wait to file past that age, you’re rewarded with a larger benefit.
You can also file as early as 62. But you’re penalized for doing so.
The idea is that if you claim early and receive more monthly checks paying you smaller amounts, it will be roughly the same as if you decide to delay filing and receive fewer checks that each pay you a higher amount.
At least that’s what the Social Security Administration says.
This leads a lot of seniors to file as soon as they’re able at age 62.
After all, if your filing age doesn’t matter, why not file as soon as possible?
Well, as it turns out, Social Security’s math is off.
Take a look for yourself…
When it comes to the optimal age to file for Social Security, life expectancy is of huge importance.
It’s only true that the amount of your benefit will be roughly the same at any age if you live until 82.
But obviously there’s a wide range of life expectancies.
And many seniors are living much longer than 82.
So the longer you can reasonably expect to live, the more sense it makes to delay filing.
It could make the difference of hundreds of thousands of dollars over the course of your lifetime.
Bottom line: when it comes to planning your Social Security filing strategy, don’t go directly to the SSA for help.
The representatives there can answer many of the questions you may have, but they aren’t there to help you maximize your benefit.
Have any other retirement-related questions?
Check out my Strategic Retirement service where I cover the “ins and outs” of Social Security… Medicare… Finding your identity in retirement… And much more!
And for a limited time, you’re eligible to claim a FREE “Retirement Box” where you’ll discover tools that can boost your lifetime retirement benefits by as much as $230,000… if not more.
Here’s to living a rich retirement,
Retirement Coach, The Daily Edge