Thinking about applying for Social Security benefits? If so, while the regulations can be complicated, there are some guidelines to help in the decision-making process.
It is possible to apply for benefits as early as 62, but this may not be the best time to apply. Knowing the best time to apply depends on individual circumstances, yet the most common mistake made is applying too early for Social Security benefits. Surprisingly, approximately 75 percent of those who apply for benefits do so before the full retirement age of 66 and six months in 2019 — knowing when the best time to apply is vital to get the maximum benefits.
The full retirement age is expected to change over the next few years, so it is essential to check the Social Security guidelines. For example, for those born in 1960 or later, the full retirement age will be 67. If Social Security benefits are delayed beyond the first year of the full retirement age, the total benefit amount will continue to increase until age 70. Waiting until age 70 also makes sense when considering the life expectancy for those 65 and older today is 83 according to the Social Security Administration. One in 4 will live to 90 with 1 in 10 living to 95.
With these statistics on life expectancy, applying for Social Security at 66 and six months increases benefits by 33 percent in contrast to applying at 62. The Social Security Administration also highlights that delaying Social Security benefits until age 70 provides the highest benefit if someone were to live to 83 or beyond.
Another consideration in choosing when to apply for benefits is how working will affect Social Security. For those who apply for Social Security between 62 and 66 and six months, there is a chance that a portion of the monthly benefits may be withheld if the earnings exceed specified amounts. The earnings range can change from year to year so it is worthwhile to check with the Social Security Administration to understand how monthly benefits may be affected if one chooses to apply for benefits before the full retirement age while still working. However, at 66 and six months, there will no longer be an earnings cap, and it is possible to receive full benefits while still working.
For married couples, choosing when to apply for Social Security benefits becomes a little more complicated as each spouse must consider what is in the best interest of the couple. For example, one spouse may be eligible for a benefit based on the work record of the other spouse. This can result in an increased income if the higher earner delays applying for benefits beyond the full retirement age.
Choosing the best time to apply for Social Security benefits depends upon personal circumstances but generally, the longer someone can delay receiving benefits, the higher the monthly benefit amount.
At Bratton Law, we are here to help guide you through the myriad of rules surrounding Social Security pension calculations. If you are close to retirement age, contact our knowledgeable estate planning attorneys today and learn how our Social Security maximization planning can help you.