David K. Hovis

Social Security Dilemma: When should I start claiming?

For those clients who are nearing the age of 62, many are anxiously awaiting to file for Social Security.  But is filing at 62 always a good idea?  Not necessarily. 

Age 62 is not full retirement age (FRA) in the eyes of the Social Security Administration.  Your FRA is based upon when you were born.  For example, if you were born between 1943 and 1954, your FRA is age 66.  If you start receiving benefits at age 62 and you were born during these years, you will only receive 75% of the monthly benefit because you began claiming these benefits 48 months early – four years before you turned age 66.  This reduction in payment is permanent.

Here are 3 things to consider before making that decision to begin receiving benefits:

  1. If you are still earning income and under full retirement age (FRA), your Social Security benefits will be reduced $1 for every $2 in earnings above the earnings limit, which for 2019 is $17,640.  Once you reach FRA, your monthly benefit payment will not be reduced if you continue to work and have earned income.
  2. For each year a worker born in 1943 or later delays claiming Social Security benefits AFTER they reach FRA, the annual benefit will increase 8% per year until age 70.  If you have other investment accounts to draw income from, you might consider utilizing these assets while your SS benefits grow.
  3. Social Security calculates your benefit from your highest 35 years of work history.  If some of those 35 years have low or no earnings, you may consider working another year or two to increase your benefit.

 

It’s important to consider all your options.  Hovis & Associates can help with strategies to maximize your Social Security benefits.  Interested in learning more?  Contact us today.

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