Thinking of Claiming Social Security Before You Retire? Think Again | Business | #retirement | #elderly | #seniors
These smaller checks aren’t a problem if you don’t think you’ll live long, because you may not be around long enough to reap the rewards of larger checks. But if you make it past your mid-80s, you’ll probably get a larger lifetime benefit by delaying Social Security until your FRA or until you reach your maximum benefit at 70. At this point, you’re entitled to 124% of your scheduled benefit per check if your FRA is 67, or 132% if your FRA is 66. You’ll receive these checks for fewer years, but if you live long enough, you’ll end up with more overall.
Claiming Social Security early is one thing if you need the money to help you cover your expenses, but if you’re still working, you may as well wait to claim so you can collect larger checks down the road.
Your benefits could be subject to the Social Security earnings test
If you claim Social Security under your FRA, your checks could also shrink due to the Social Security earnings test. For those who will be under their FRA for all of 2021, the Social Security Administration takes $1 from your benefit checks for every $2 you earn over $18,960. If you’ll reach your FRA this year, you’ll only lose $1 for every $3 you earn over $50,520 if you hit this amount before your birthday. That’s more likely to happen if you’re working a full-time job.
The good news is that that money isn’t gone forever. Once you reach your FRA, the Social Security Administration recalculates your benefit to account for the money it withheld from you in earlier years. This makes your future checks larger. But rather than deal with all of that, you could just wait to claim Social Security until you’re ready to leave the workforce if you don’t need the money right now.