Whether or not your Social Security benefit will be a major or minor source of your retirement income, it’s important to know the basics of the system. That will help you maximize your benefits and avoid filing pitfalls that you’ll regret later. We’ve got five Social Security rules to memorize right now.
You can claim at 62
Your Full Retirement Age, or FRA, is based on the year of your birth, and is between 66 and 67 for non-retirees. At this age, you’re eligible to receive your complete Social Security benefit, which is the sum amount that’s calculated from your earnings history. If you choose to not wait, or can’t, until FRA, you can claim as early as age 62, though your benefit amount is discounted.
You can delay your claim until 70
You will get your maximum monthly retirement benefit if you wait until age 70. Each year after FRA that you delay claiming, your benefit actually increases by 8%. However, you must have fully qualified for Social Security prior to FRA. What this means, is that you’ve worked or paid your Social Security taxes for at least 10 years.
Your lifetime benefit doesn’t change based on timing
Your lifetime benefit should be the same whether you claim Social Security early or late. By claiming at age 62, you’ll get a longer stream of smaller payments. Claiming at 70 will allow you a shorter stream of payments at a higher amount. However you claim, the cumulative payout is the same. So, if you do need to claim early, you won’t be leaving money on the table.
Your spouse can claim based on your earnings
If you qualify for Social Security benefits and have a spouse of more than one year, they can claim based on your earnings history. The sum paid to your spouse will be either what the spouse earned from working, or up to half of your benefit at FRA, whichever is more. Your husband or wife can start receiving these benefits at age 62, as long as you are receiving or are eligible for benefits.
You get a do-over
Now, what happens if you claim Social Security at age 63 but then are offered a job opportunity of a lifetime? Good news! Social Security allows you to withdraw your application within 12 months of filing. However, note three things: if you withdraw, you have to repay any benefits you or anyone in your family received; any family member who received benefits based on your earnings has to consent to withdrawal in writing; this is a one-time benefit. You are unable to withdraw, refile later, and withdraw again.