Applying for Social Security is not a decision to be taken lightly. Although your benefits are calculated based on your average monthly salary, adjusted for inflation, during the 35 highest paid years in the workforce, the age you register will also dictate how much money you will receive from the program each month.
Now that 2021 is coming, you may be wondering if this is the right year to apply for benefits. Here’s what you need to know.
You can claim benefits if you were born in 1959
The earliest you can apply for Social Security is at age 62. By the way, this is the most common age to claim benefits. But there is a downside to filing an order for 62 – you will reduce your monthly payments for the rest of your life.
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You are only entitled to your full monthly Social Security benefit based on your salary history when you reach full retirement age, or FRA. FRA is based on your year of birth, as follows:
|
Year of birth |
Full retirement age |
|---|---|
|
1943-1954 |
66 |
|
1955 |
66 and 2 months |
|
1956 |
66 and 4 months |
|
1957 |
66 and 6 months |
|
1958 |
66 and 8 months |
|
1959 |
66 and 10 months |
|
1960 or later |
67 |
Data source: Social Security Administration.
As you can see, if you were born in 1959, your FRA is 66 and 10 months. If you claim your benefits at age 62, you will reduce them by almost 30% over your lifetime. And that is a success that you may not be able to afford.
You may want to register if you were born in 1955
For anyone born in 1955, FRA is 66 years and two months old. If you are coming to the FRA this year, it may be a good time to apply for benefits. That said, you don’t Tue to apply for Social Security once you get to the FRA. Instead, you can choose to postpone your benefits until you are 70, and each year you make it will increase by 8%. This increase will be yours to enjoy permanently.
You should not delay your deposit if you were born in 1951
If you were born in 1951 and are therefore turning 70 this year and have not yet claimed Social Security, you must certainly make plans to do so. Although it makes sense to postpone your claim until you are 70 years old, when you reach 70, your benefits no longer increase. That way, there is no financial incentive to delay further, and if you wait too long, you may end up losing the money that should have been yours.
If you are 70 years old this year and didn’t sign up for benefits right away, don’t worry. The Social Security Administration will pay you up to six months of retroactive benefits, so technically, you can sign up at 70 and a half and not lose any money. But a better plan is just to coordinate your process so that you start receiving these benefits when you turn 70. After all, you are entitled to money.
Is this your year to register for Social Security?
You can decide to enroll in Social Security this year, even if you don’t fall into one of the age categories above. For example, if you are turning 65 this year, you can choose to start receiving benefits in conjunction with your Medicare enrollment. No matter your age, get to know your FRA and understand the repercussions of your Social Security application at different times in your life. Having this knowledge will help you reach the best decision.