When Is the Right Time for You to File for Social Security?

If you’re approaching retirement, you’re likely facing a number of big decisions. Do you stay in your current home or downsize? How do you allocate your investments to minimize risk but also generate income? What are your plans to pay for medical expenses and long-term care?
​
Retirement is a major life transition, so it comes with a wide range of big decisions. One of the most important decisions you may make is when to file for Social Security. Many retirees want to file as soon as they’re eligible. That feeling is understandable. After all, you’ve been paying into the system for decades, and now you want to see your share of the benefits.

However, there are also great reasons to wait to file. Generally, the longer you wait to file, the larger your benefit will be. Also, once you file, that decision is permanent. There is no option to change your choice in the future. For those reasons and more, it’s important to consider all of your options before going forward with your benefit claim.

Below are three options with regard to your Social Security retirement benefits. Explore each of these and examine how they fit into your overall retirement income plan.

File early.

The earliest age at which you can file for Social Security retirement is 62. Again, you may be tempted to file as soon as you have the opportunity. However, you may want to think twice before doing so.

One of the most important factors in calculating one’s Social Security retirement benefit amount is the age at which the person files relative to a date known as full retirement age (FRA). If you file at your FRA, you get your full retirement benefit based on your work and earnings history.

However, if you file before your FRA, your benefit is permanently reduced. The earlier you file relative to your FRA, the greater the reduction. For example, if your FRA is 67 and you file for benefits at age 62, your annual benefit is reduced 30 percent. However, if your FRA is 67 and you file at 66, the reduction is only 6.7 percent.1

You may have a very real need for income at age 62 that requires you to file early. However, if you can wait, you’ll give yourself a higher annual benefit.

File on time.

You can get your full benefit by filing at your FRA. Your FRA is based on the year you were born. For most retirees, it’s between their 66th and 67th birthdays.

If you were born between 1943 and 1954, your FRA is 66. If you were born in 1960 or later, your FRA is 67. If your date of birth is between 1955 and 1959, your FRA is 66 plus two months for every year after 1954. For example, for those born in 1956, your FRA is 66 plus four months.1

File late.

There’s nothing saying you have to file at your FRA. You can delay your filing past your FRA all the way to age 70. The benefit of doing so is that your payment is increased for each year you delay your filing.

Right now, the Social Security Administration offers an 8 percent annual increase in benefits for every year that you wait past your FRA. For example, if your FRA is 66 and you wait until age 70, you would receive a total 32 percent permanent increase in your payments.2

If you can afford to wait, there’s benefit in doing so. However, if you don’t have income from other sources or you don’t anticipate a long life expectancy in retirement, waiting may not make sense.

Not sure when you should file? Contact us for more information. We can help you analyze your needs and options and determine the best strategy for you. Let’s connect soon and start the conversation.

1https://www.ssa.gov/planners/retire/retirechart.html
2https://www.ssa.gov/planners/retire/delayret.html

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov

16161 - 2016/10/18