As you approach retirement, one of the most important decisions you’ll have to make is when to start collecting your Social Security benefits. The timing of this decision can have a significant impact on the amount of benefits you receive and your overall retirement income.
In this article, we’ll provide an overview of the different claiming strategies and options available and help you understand what you need to know before you retire.
The Best Ways To Claim Social Security
The basics of Social Security benefits
Before we dive into the different claiming strategies, it’s important to understand the basics of Social Security benefits. To be eligible for benefits, you must have earned a certain amount of Social Security credits, which are based on your work history and earnings.
Once you are eligible, your benefits are calculated based on your average indexed monthly earnings (AIME) during your 35 highest earning years.
Early claiming strategies
One of the most popular options for claiming benefits is at age 62, the earliest age you can start receiving Social Security. While claiming early has its perks, such as the ability to start receiving benefits sooner, it also has its downsides.
When you claim benefits at age 62, your benefits will be reduced by up to 30% compared to what they would be if you wait until your full retirement age.
Delayed claiming strategies
Delaying your benefits past your full retirement age can result in an increase in the amount of benefits you receive each month. For example, if your full retirement age is 67, your benefits will increase by 8% for each year you wait to claim, up until age 70.
Although this strategy can increase the amount of benefits you receive, it also has its drawbacks, such as the need to find other sources of income to bridge the gap until you start receiving your Social Security benefits.
Spousal and survivor benefits
Another important aspect to consider is how spousal and survivor benefits may affect your claiming decisions. A spouse can claim up to 50% of the other spouse’s benefit if it’s higher than their own benefit.
It’s important for couples to coordinate their claiming strategies in order to maximize their combined benefits.
Other factors to consider
When making a decision on when to claim your Social Security benefits, it’s important to consider the impact of your work history and earnings on your benefits, as well as other retirement income sources such as pensions and savings.
It’s also important to be aware that taxes may apply to a portion of your Social Security benefits if you have other income sources.
Start Today Claiming Your Social Security
Making a decision on when to claim your Social Security benefits can be a complex process and requires careful consideration of your unique situation. To ensure you are making an informed decision, it is recommended to consult with a financial advisor and use online resources such as the Social Security Administration’s website.
Remember that, no matter what strategy you choose, it’s important to plan ahead and make the most of your benefits.