3 Social Security Moves to Make Before Age 62 | Smart Change: Personal Finance

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(Katee Brockman)

Social Security benefits can potentially make or break your retirement, so it’s crucial to have a strategy in place to maximize your monthly payments.

Your benefits are not set in stone, and the decisions you make leading up to retirement will have an impact on how much you receive each month. The earliest you can file for Social Security is age 62, and there are a few important moves to make before you become eligible for benefits.

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1. Determine your full retirement age

Your full retirement age (FRA) is the age at which you’ll receive the full benefit amount you’re entitled to based on your work record.

If you were born in 1960 or later, your FRA is age 67. If you were born before 1960, you have an FRA of either 66 or 66 and a certain number of months, depending on the exact birth year.

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Knowing your FRA is important because it will impact your benefit amount. If you claim before your FRA, you’ll receive smaller checks each month. On the other hand, if you delay Social Security past your FRA, you’ll receive your full benefit amount plus a bonus each month.

2. Decide what age you want to claim

Again, the age you file will affect the amount you receive each month, so it’s wise to think carefully when deciding when to claim.

Age 62 is the earliest you can file, but by doing so, your benefit amount will be permanently reduced by up to 30%. If you delay benefits up to age 70, you could collect up to 32% extra each month on top of your full benefit amount.

There’s no right or wrong answer as to when you should claim, as there are advantages and disadvantages to each strategy. The right move for you will depend on your unique situation, but be sure you’re aware of how your decision will affect your benefit amount before you claim.

3. Check your estimated benefit amount

Even if you’re still years away from retiring and claiming Social Security, you can check how much you’re expected to receive in benefits.

First, if you haven’t done so already, you’ll need to create a mySocialSecurity account. From there, you can review your Social Security statements to see your estimated benefit amount based on your real earnings throughout your career.

Keep in mind that this benefit amount could change depending on how much you earn between now and the time you file for Social Security. Also, this number assumes you’ll be claiming at your FRA. If you plan to file before or after that age, it will affect your monthly payments.

When you know approximately how much you’ll be receiving in benefits, it will be easier to plan for retirement. You can better gauge how much of your spending will be covered by Social Security, then determine whether your savings will be enough to make ends meet.

Making the most of Social Security

Social Security benefits can make up a significant portion of income in retirement, so it’s wise to have a plan in place to maximize them. While you don’t need to know every detail about how the program works, understanding the basics can make it easier to make the best decisions for your situation.

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