When to Apply for Social Security Benefits

Wondering when to apply for Social Security benefits? Want to learn how to make the most of your retirement income? You came to the right place! While we aren’t financial advisors, we can give you some advice when it comes to Social Security since Social Security and Medicare often go hand-in-hand.

Today, we’ll explore how filing for Social Security at different ages can impact the amount you get each month. We’ll also talk about your current income, how it impacts your benefits, and how to apply for Social Security when you’re ready.

When Is the Earliest I Can File for Social Security?

If you're considering applying for standard Social Security retirement benefits (excluding disability or benefits for widows/widowers), you can begin receiving these benefits as early as 62 years old. You're eligible to initiate the application process when you're 61 years and 9 months old. The first payment would be issued the month after you turn 62.

However, a detail to note is that you are only considered 62 years old for Social Security purposes after you've completed a full calendar month at that age. So, for instance, if your birthday falls on June 23rd, you'll have to wait until the end of July to be recognized as 62. Therefore, your first payment would be due in August.

For a smoother process, it's often suggested to submit your application about three months prior to when you aim to start collecting benefits.

What Is Full Retirement Age?

You can start receiving Social Security benefits as early as age 62, but it's essential to know that if you start before your Full Retirement Age (FRA), your monthly benefit amount will be reduced.

Your FRA is determined by your birth year. For individuals born from 1943 to 1954, the FRA is 66 years old. After this period, for each subsequent birth year up to 1959, two months are added to the FRA. As an illustration, those born in 1955 will reach their FRA at 66 years and 2 months, and those born in 1956 will reach it at 66 years and 4 months. For anyone born in 1960 or afterward, the FRA is set at 67 years.

This gradual increase in the FRA was implemented through legislation aimed at ensuring the long-term financial viability of the Social Security system. By adjusting the FRA, the system aims to sustain its ability to pay out benefits in the coming years.

The Social Security website provides useful online tools to help individuals gauge their benefit amounts based on their filing date. Remember, the earlier you opt to receive benefits before your FRA, the smaller your monthly payments will be.

The Impact of Benefit Reductions

Numerous individuals choose to apply for Social Security at the earliest opportunity, despite being aware that this decision will result in a lower monthly payout. It's crucial to realize that this decrease in benefits is lasting.

Take, for instance, someone who has an FRA of 67 years. If they decide to begin receiving benefits at 62, their monthly payout will be reduced by 30% for the rest of their life.

Let's illustrate this with a hypothetical scenario: Suppose John has a projected monthly benefit of $2000 at her FRA of 67. Choosing to retire earlier, he decides to start collecting benefits at 62, a choice made by many retirees in need of an immediate income boost. By doing so, his monthly payment is adjusted to $1400, a decrease that will remain for the entirety of her benefit period.

Other factors can influence the total benefit amount someone might receive, such as entitlements related to a current or former spouse, provided they were married for at least a decade. However, this explanation is primarily centered on understanding the base benefits determined by an individual's employment history.

Increase Your Social Security by Delaying Benefits

Let's delve into the benefits of postponing Social Security by looking at a scenario with John. If John chooses to defer his benefits until she turns 70, he'll gain an extra 8% in his monthly payouts for each year he waits. This accumulates to a lasting 24% hike in his monthly sum.

Originally, had John claimed his benefits at her FRA, he would've received $2000 each month. By opting to wait until 70, his monthly income rises to $2,480, a sum he'd receive for life.

Such an increment can be notably beneficial, especially if John is financially comfortable to wait. It's advisable to consult with a financial advisor to evaluate when to claim Social Security based on your individual circumstances, including your financial outlook and any supplementary retirement funds.

Another pivotal factor is your spouse's situation. If you're the one with a higher benefit and you predecease your spouse, they will be entitled to 100% of the amount you were receiving or eligible to receive once they hit their FRA.

By holding off until you're 70 to claim Social Security, you're not only augmenting your own benefits but potentially also those of your spouse (or underage children) if you were to pass away first. This approach is termed as optimizing Social Security benefits for your family, and it's an essential facet of retirement planning.

It's also key to note that any delay beyond the age of 70 doesn't lead to further increments in benefits. Thus, it's prudent to begin drawing benefits by that age.

The Impact of Your Current Income on Social Security

When deciding when to claim Social Security, your current income from employment—whether full-time or part-time—plays a significant role. It's not uncommon for individuals to remain in the workforce into their 60s or even 70s. However, there's a cap on how much you can earn annually before Social Security starts to reduce your benefits.

In 2023, the earning threshold was set at $21,240 for each year leading up to your FRA. Should you exceed this, Social Security may deduct $1 from your benefits for every extra $2 earned.

This ceiling sees a substantial rise during the year you approach your FRA. For instance, in 2023, the limit stands at $56,520 for the months preceding your FRA. Crossing this limit leads to a deduction of $1 for every additional $3 earned.

It's reassuring to note that these deducted amounts aren't lost forever. Instead, they're recalculated into your future benefit payouts. Plus, after reaching your FRA, there's no more earnings cap. This means you can generate any income without affecting your monthly Social Security payments.

How to Apply for Social Security

Once you've decided on the appropriate time to claim your Social Security benefits, the next step is to initiate the application process. If you're approaching 62, you can start your application three months before your birthday. However, if you're already past 62, it's advised to apply four months prior to when you anticipate receiving your initial benefits.

Gone are the days when visiting the Social Security office in person was the primary method for filing for benefits. While this option still exists, there are now more convenient avenues available.

You can reach out to Social Security via phone at 1-800-772-1213 to procure an application. Alternatively, for a more streamlined experience, you can apply for both your retirement benefits and Medicare online at SSA.gov.

Throughout the application process, expect Social Security to request an array of information. This might encompass details like your birthdate, your spouse's birthdate, and pertinent dates from your marital history. You might be required to produce original documents like your birth certificate, marriage certificate, and recent tax returns. Moreover, ensure you have your recent W-2 forms on hand and your banking details ready for setting up direct deposit of your benefits.

To be ahead of the curve during this process, it's beneficial to keep a keen eye on your earnings records annually while you're still employed. You can do this by registering an account on MySocialSecurity.gov. Make it a habit to log in annually to verify your earnings history. Remember, your eventual benefit will be calculated based on your highest 35 years of earnings throughout your career.

However, at times there might be discrepancies, like a year reflecting $0 earnings when you've worked. Regular checks on your MySocialSecurity account can aid in identifying and rectifying such anomalies early on rather than grappling with them long after spotting an oversight.