For millions of Americans who have worked their whole lives, getting their Social Security benefits is one of the most important things they can do. They are now ready to enjoy their retirement.
But they should always think about what it will cost them if they claim these monthly benefits too early or too late. Either way, it could have a big effect on how much money they get to cover their living costs.
If you turn 62 in 2025, consider this before claiming your Social Security benefits
You can start getting Social Security benefits as early as age 62. You will get some money, but it will not be as much as it could be.
The monthly payments will be bigger for people who wait until they reach full retirement age (FRA), which varies by birth year but is between 66 and 67.
There could be a big difference. Getting this four- or five-year benefit head start could lower your payments by up to 25% to 30% for good. It depends on your age.
Do not forget that the penalty goes down as you get closer to retirement age. For example, if you file a claim 12 months before you reach full retirement age, your monthly benefits will only be 62.23% of what they would be at FRA.
The average size of a Social Security check right now is just over $1,900, so this possible difference is still a big chunk of money for most people. It could be a few hundred dollars a month.
Should Social Security be postponed until age 70?
You should keep in mind, though, that if you waited until you reached your goal FRA, your final payments would be a lot higher.
If someone waits until they are 70 years old to start getting benefits, they will get 15% to 25% more each month than if they started getting benefits at their full retirement age. The big difference in costs between filing for benefits early and late is shown in the table below.
So, the first thing you should do is call, visit, or go online to the Social Security Administration and look over all of your current benefit options.
You may find that there are good reasons to keep your job for at least one more year. Another thing is that you might decide that working until you are 70 does not give you enough benefits.
Also, there are no extra benefits to waiting to file until you are 70. There is even a small reason to do it as soon as possible after they turn 70.
The Social Security Administration only pays back benefits for six months at a time. If you wait seven months or more to file a claim, you will lose money that you will never get back.
Is Social Security paid by direct deposit or check?
Of course, if you have not applied for Social Security yet but plan to soon, you should do more than just compare the amounts of money you expect to get.
One more thing you should do before you retire is make sure that the Social Security Administration has correct information about your past salaries and that you have an easy way to receive your direct deposit payments (no more paper checks!). If you paid Social Security taxes on this income when you got it, you may have missed a payment.
But making or changing a plan for your money after you retire might be the most important thing you need to do before you retire.
Can you put some of your savings into money market funds that earn more and are still easy to get to, or do you need a big chunk of cash sitting in a checking account earning little interest?
Is the focus of your portfolio still too much on growth? If so, you should start changing it now, because the market can change a lot in just a few months.
If you already have health insurance through your job, you might want to think about buying an extra plan to go along with Medicare.
