Don’t Apply for Social Security If You Can’t Answer These 3 Questions


IIt’s normal to be eager to apply for Social Security benefits. You’ve spent decades contributing to the program, so of course you want to reap the rewards. But rushing to sign up can actually cost you in the long run. Before completing this application, take a minute and make sure you know the answers to the three questions below.

1. Why is it important to apply for social security?

The age at which you apply for Social Security determines the amount of your monthly checks. You can register from the age of 62, but if you want to receive the full benefits to which you are entitled based on your employment history, you must wait until full retirement age (FRA) to register. More on that below.

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Each month you delay benefits, your checks increase slightly until you reach age 70, when you qualify for your maximum Social Security benefit.

But that doesn’t mean it’s always better to delay benefits. You should also weigh your life expectancy and your financial situation. If you don’t expect to live long or can’t pay your bills without Social Security, it’s probably a good idea to enroll early. Otherwise, you’ll probably get more while waiting to sign up.

2. What is my full retirement age (FRA)?

Your FRA is the age at which you become eligible for full Social Security benefits based on your work history. The government assigns it to you based on your year of birth. For those born between 1943 and 1954, your FRA is 66. Then it increases by two months each year thereafter until it reaches 67 for adults born in 1960 and later.

Those who choose to immediately enroll in Social Security at age 62 receive only 70% of their full benefit by check if their FRA is 67 or 75% if their FRA is 66.

Your FRA also affects your maximum benefit. Those with an FRA of 66 get 132% of their full benefit by check if they wait until age 70 to enroll, while those with an FRA of 67 only receive 124% of their full benefit by check at 70 years old.

You can find out your FRA and see how much you can expect from Social Security at different starting ages by creating an account on My Social Security. You’ll need to answer a few questions the first time you create your account to prove your identity, but once you do, you can create a password to log back in.

3. How will working while applying for Social Security affect my benefits?

It is possible to apply for Social Security while you are still working, but doing so may subject your benefits to the Social Security earnings test. This withholds a certain dollar amount from each of your benefit checks if your income exceeds a certain threshold.

If you will be under your FRA for all of 2022, you will lose $1 on your checks for every $2 you earn over $19,560. But if you hit your FRA in 2022, you’ll only lose $1 for every $3 you earn over $51,960 if you hit that amount before your birthday.

The good news is that the money lost for the income test is not lost forever. Once you reach your FRA, the government recalculates your benefit amount to account for the money it previously withheld. This means that your future check will be a little bigger. But they still won’t be as significant as they would have been had you simply delayed Social Security until your FRA without claiming.

If you don’t need your Social Security benefits to cover your costs, it may be better to wait until retirement to register rather than working and claiming at the same time. Delaying benefits, even a few months, can make a lasting difference to your checks.

I hope the above information wasn’t new to you, but if anything surprised you, you’ll probably want to revisit the suggestions here and think carefully about when you consider signing up for Social Security. It may take a bit of time, but it can help you get the most benefit possible, so it’s worth it.

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