It is never too early to start thinking about retirement. However, as you get closer, you need to start considering when you want to retire. It is important to do this so that you can maximize your Social Security benefits.
As you prepare for retirement, it’s important to consider how Social Security will affect your plans. Retirement benefits are essential to the majority of retirees to some degree, and for some seniors, they are their primary source of income.
To maximize your monthly payments, you should do everything you can. Planning for retirement is best done well before you expect to retire, and there are a few essential steps to take during your 50s.
1. Determine your full retirement age
Based on your earnings throughout your career, your full retirement age (FRA) is the Age at which you’ll receive your full benefit amount. A person born in 1960 or later has an FRA of 67. Based on the year in which you were born, your FRA is either 66 or 66 and a certain number of months, if your birth year falls before 1960.
The FRA determines how much you will receive each month based on your income. When you file a claim at your FRA, you will receive your full benefit amount. There is also the option of claiming before or after your FRA, which will impact the amount of your payment.
2. Decide at what Age you want to claim your social security
Once you know your FRA, it will be easier to decide at what Age to begin claiming. Your earliest filing age is 62, which will result in a reduced payment. These smaller checks will be permanent, too — so your benefit amount won’t increase once you reach your FRA.
If you delay benefits past your FRA, you will receive more extensive monthly checks. By waiting until 70 to file, you’ll receive a 24% boost on top of your full benefit amount if your FRA is 67. Choosing to file at 62 would result in a 30% benefit reduction.
There are advantages to both claiming early and delaying benefits, so there is no right or wrong answer. However, the sooner you decide when to claim, the easier it will be to plan for retirement.
3. Consider a strategy with your spouse
Consider creating a strategy for when you and your spouse will begin claiming your Social Security benefits if you and your spouse are both eligible.
Regardless of your Age, you could apply for benefits at the same time, for example. If one of you claims 62, you will start receiving benefits early in retirement, while the other waits until 70 to receive larger checks. The two of you could delay Social Security benefits if money is going to be tight in retirement.
Remember that there is no right or wrong answer to this question. As a result, developing a claiming strategy well before you retire is an excellent idea in order to maximize your retirement income. There are millions of seniors who rely on Social Security benefits for income. Make sure you’re prepared for retirement by taking a few steps in the years leading up to it.