Are you thinking about claiming Social Security? These benefits are likely to be an important source of income for you during retirement. And you get to choose when to claim, from as early as 62 or as late as 70 if you want the largest amount of income.
Because your benefits are a valuable retirement asset, you’ll want to make the smartest possible choices about when you start receiving them. To do that, you should wait to claim until you see a few green lights suggesting you’re good to go.
Here’s what they are.
Your Social Security benefits are based on your wages over the 35 years when your inflation-adjusted salary was the highest. A career history that spans less than 35 years is going to result in lower benefits since Social Security will factor in some years when you made $0 while determining how big your checks will be.
Not only do you want to avoid this, but you’ll also want to be sure all 35 years included in your benefits calculation are years when you were happy with your earnings. If you had some periods at the beginning of your career when you didn’t make much money, or if you had some years of partial unemployment when your annual salary was really low, you may not want those counted in your benefit calculation.
If that’s the case and you’re earning more now, you can put in an extra year or two on the job. These years at the higher salary will become part of your calculation, while lower-earning earlier years will be pushed out.
Once you have a 35-year earnings history you’re happy with, that’s a good sign you’re well-positioned to claim your benefits.
Remember, you can start Social Security any time after age 62, but how much you receive each month will depend on your claiming age.
The earlier you claim benefits, the smaller your benefit will be. Each month you delay, your payments get a little bigger (until they max out at age 70). So you have to think carefully about whether you want smaller checks for more years or bigger checks later in life.
You can sign into your my Social Security account to see what your benefits will be for the different ages you make your initial claim. Check out those numbers and see how your income would be affected so you can make an informed choice before you get started with your payments.
Finally, you need to realize that Social Security is only meant to replace about 40% of pre-retirement income, so it’s a major red light if you’re hoping your benefits alone will support you.
If you have other money coming in from retirement investment accounts, a pension, or other sources, and the combined funds are sufficient to cover your needs, then you have the green light to go forward.
Be sure to watch for all three of these green lights and don’t claim Social Security until you’re sure you’re truly ready to make this important financial decision.
The $21,756 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $21,756 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.
The Motley Fool has a disclosure policy.
Blog powered by G6
Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.
For any inquiries, please contact [email protected]