Claiming Social Security is a big decision. Don’t take it lightly.
US to phase out most paper checks for federal benefits
The federal government will begin phasing out paper checks for Social Security and other federal payments by September 30.
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If you’re thinking about claiming Social Security at age 62, you’ll probably run into at least a few people who say it’s not a good idea. If you apply for Social Security as soon as you qualify, your check could be permanently reduced by up to 30%. For some, lifetime benefits also shrink.
But actually, this isn’t the biggest mistake about Social Security. It could be even more catastrophic, but fortunately it’s easy to avoid.
You can’t optimize your Social Security claim if you don’t understand the rules
In fact, people often change quickly when they claim Social Security at age 62, but this is not universally true. If you delay checking without understanding the benefits and risks, you could end up losing more than you gain.
Each time you delay enrolling in Social Security, your benefits increase, and the rate of increase changes over time. This partly depends on your Full Retirement Age (FRA), which is 67 for most people. The following table shows how quickly your check grows due to waiting.
Data source: Social Security Administration.
Age 70 is the age you qualify for the largest check, so you won’t gain anything by delaying your benefits any longer. Some people choose to wait until age 70 to claim the highest possible check and, if possible, maximize their lifetime benefits.
But waiting that long is only possible if you can afford to cover your living expenses in other ways in the meantime, and that’s not realistic for everyone. If your life expectancy is short, it may be the wrong thing to do.
What to consider when choosing your Social Security claiming age
The first thing to consider when choosing when to apply for Social Security is whether benefit deferrals are on the table. If you can’t work and don’t have a lot of personal savings, claiming a check at age 62 may be your best option, even if your lifetime benefit is lower.
If you have a short time to live, you may want to claim early so you can receive as much as possible while you’re still alive. Or, if you have family members who are expected to rely heavily on survivor benefits after you pass away, you may be better off not claiming Social Security at all. This maximizes the amount you receive after you pass away.
There is no need to clearly set the intended age for application. Choose what works best for you now, and feel free to update it if your health or lifestyle changes.
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