As most people are aware, you can start taking your Social Security benefit as early as 62.
You can also delay taking benefits until you are 70. In between 62 and 70 is what’s called your “Full Retirement Age.” Understanding the distinctions of “Full Retirement Age” is an integral part of your claiming strategy.
There are basically four factors that determine your claiming strategy and ultimate amount of lifetime benefits you will receive. Three of which you can control and one you cannot.
The three factors you can control are:
- Your work history
- Your earnings history
- Age at which you file
The one factor you cannot control is the year you were born. The year you were born determines your Full Retirement Age. As I mentioned before, this is a critical date because there are options available to you that are not available otherwise if you file before Full Retirement Age.
Any time you take your own worker benefit before your Full Retirement Age, it will always be reduced. This reduction could be as high as 30% at 62 if your full retirement age is 67.
Here are your opportunities for when you reach your Full Retirement Age:
- You can collect 100% of your retirement benefit
- The Annual Earnings Limitation goes away
- You can take advantage of the “Restricted Application” claiming option to maximize lifetime benefits if you were born before 1/2/1954
- You can voluntarily suspend benefits
- You start to earn delayed retirement credits if you choose to start benefits at a later date. This could increase your monthly benefit by 24%-32% and also increase the survivor benefit.
Based on the additional options available to you at your Full Retirement Age, you have the ability to design a claiming strategy that will maximize lifetime benefits that are not available to you before Full Retirement Age.
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