Understanding Social Security: 4 Things You Need to Know Before You Claim
When it comes to social security, making an informed decision can be a game-changer for your retirement years. Ninety percent of the population age 65 or older are receiving social security benefits but only 4 percent have opted for the optimal claiming strategy. This means a staggering 96 percent of people are leaving money on the table and not receiving the optimal benefits from Social Security. We want to improve this statistic. So, what do you need to consider before claiming your benefits?
Your Full Retirement Age
First, you need to know your full retirement age, which is when you become eligible to receive 100 percent of the benefits. This age varies based on individual circumstances and can significantly impact your financial future. If you were born in 1960 or later, your FRA is age 67.
Understanding your life expectancy is essential in making a sound decision about when to claim social security. This factor is different than the average age for your demographic and helps in estimating the duration of the benefits. For couples who are 65 today, one of them has a 47% chance to live to age 90. This is important as the surviving spouse will "inherit" the higher of the two social security benefit amounts.
Your Earnings Record
Knowing your earnings record, or how much you've contributed to the program, can provide clarity on the potential benefit amount you're entitled to. Social Security calculates your benefit using your highest 35 years of indexed earnings, including zeros for those years with no earnings. You can find your earnings history at ssa.gov. Note the PDF version will start to bunch earnings by decade, whereas the XML file will provide your full earnings history.
Available Benefit Options
Finally, you need to understand the various benefit options that are available to you and their impact/ Are you married? Widowed? Receive a pension? Self-Employed? Knowing this information helps determine the benefits you are eligible for.
Unfortunately, there's no "best" age to collect Social Security – it's all dependent on these factors that are unique to each individual. It's an important decision that you only get to claim once. Thus, it's important to take the time to understand the claiming strategies available to you and the impact they can have on your retirement plans.
If you've already filed, you can withdraw an application within 12 months of claiming benefits. In this scenario, you will need to repay all the benefits you have collected, at zero interest, and then you are free to re-file later.
At Clarity Wealth, we provide comprehensive social security planning. This process includes understanding your goals are when it comes to retirement and then determining the benefits available to you. Knowing this, we prepare a detailed report outlining the benefits and claiming strategies available to you so you can select the optimal Social Security benefits.
For more detailed information on social security benefits and claiming strategies, you can visit our Social Security webpage here: https://rssa.com/analyst/Stephen-Crawford/
If you have any questions or need further assistance, don't hesitate to reach out. We look forward to helping you optimize your retirement.