To be eligible for benefits, individuals must have earned 40 calendar quarters of wages that were subject to Social Security tax. The amount of the benefits you would receive at full retirement age (FRA) is based on the average of the 35 highest years of earnings.
What is full retirement age (FRA)?
Individuals also have the option of taking Social Security beneﬁts before full retirement age at a reduced monthly amount. For example, if you were expecting $2,000 in monthly beneﬁts at FRA, you would receive only 75% of your beneﬁts if you chose to take Social Security at age 62. By waiting until age 70, you could receive $2,640, or 132% of your beneﬁts.
When Should You Take Social Security
What seems like a simple question may not have a simple answer. Taking beneﬁts early may result in a substantial reduction in total Social Security beneﬁts over the years.
Consider These Factors
Do you need Social Security to ﬁll an income gap?
Keep in mind that Social Security beneﬁts are reduced permanently when you claim them prior to your full retirement age, which could decrease your overall lifetime Social Security beneﬁt amount by up to 24%.
What’s your life expectancy and break-even age?
Health status, longevity, and retirement lifestyle are three variables that can play a role in your decision on when to claim your Social Security beneﬁts. Estimate your own personal “break-even” age based on these types of variables, which will differ from person to person. Will you work during retirement?
Working individuals who take beneﬁts prior to full retirement age may incur an earnings penalty whereby beneﬁts are withheld when earnings exceed a speciﬁc amount ($17,640 in 2019).
Are you planning with a spouse?
For married couples who take early beneﬁts, beneﬁts are reduced for one of the spouses
*This hypothetical example assumes that the person is not working in retirement. Sample beneﬁt amounts are not exact due to rounding. They do not reﬂect annual cost-of-living adjustments or taxes. Had taxes been taken into account, the amounts would be lower. Beneﬁt at full retirement age (age 66) is assumed to be $2,000 per month. Source: Fidelity Investments.
For more information, Contact MCF today!
1 Source: Social Security Administration, Fact Sheet, 2018.
2 Source: AARP, Social Security Resource Center, 2019.
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