Did you claim social security at 62? Try this to increase your benefits

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Many people enroll in Social Security as soon as they become eligible at age 62, but not all realize that it comes at a cost. This cuts down on your checks and could cost you tens or even hundreds of thousands of dollars in your retirement.

That’s not to say it’s a mistake for everyone. But if you regret signing up for Social Security immediately, there is something you can do to increase your benefits.

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Why starting Social Security at 62 reduces your checks

The Social Security Administration assigns everyone a full retirement age (FRA) according to their year of birth. The following table can help you find yours:

year of birth

Full retirement age (FRA)

1943 to 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 and after

67

Data source: Social security administration.

You have to wait for your FRA to enroll if you want the full amount you are entitled to based on your employment history. Starting earlier earns you more years of benefits, but the Social Security Administration reduces your checks a bit for each month you claim from your FRA.

When you enroll at 62, you only get 70% of your full benefits by check if your FRA is 67 or 75% if your FRA is 66. Each month you delay increasing your benefits until until you reach your maximum benefit at age 70. This is 124% of your total check benefit if your FRA is 67 or 132% if your FRA is 66.

Looking at this, it may seem that delaying benefits is wiser. But it depends on how long you expect to live. There is no point in delaying the age of 70 if you have a serious illness and don’t believe you will get there. But if you plan to live into the mid-80s or beyond and can afford to defer benefits will likely make you more money overall.

What if you signed up for 62 already?

If you signed up at 62 and now regret that decision, you may be able to withdraw it. You can change your mind about applying for social security as long as less than a year has elapsed since you registered and you repay all benefits paid to you and one of your family members. based on your employment history. If you do this, the Social Security Administration will treat you as if you never applied for Social Security, and when you re-enroll later, your checks will be bigger.

This strategy is not achievable for everyone. You cannot take advantage of it if it has been more than a year since you registered and some people cannot afford to repay what they have already received in benefits. Fortunately, there is another way.

Once you reach your FRA, you can contact the social security administration and ask them to suspend your benefits. If you do this, you will not receive any more Social Security checks until you ask the Social Security administration to start sending them again or you are 70 years old. In the latter case, your benefits will automatically begin the month you turn 70.

By doing this, you will earn deferred retirement credits, which will increase your future checks. Each month you delay benefits beyond your FRA increases your benefit by 2/3 of 1% per month, or about 8% per year.

If you do this, you won’t end up with as much money as if you had pushed Social Security to age 70, but you can still increase your checks significantly.

Let’s say you have an FRA of 67 and you signed up for social security at 62. You receive a benefit of $ 1,500 per month, although this is only 70% of the $ 2,143 per month that you could have received if you had delayed benefits until your FRA. . If you had never signed up for Social Security, you could have received $ 2,657 per month by pushing benefits back to 70.

But this ship has sailed and now you get a check for $ 1,500 a month. If you choose to suspend benefits between the ages of 67 and 70, you will accumulate three years of deferred retirement credits, which will increase your benefits by 24 percentage points. So rather than getting $ 1,500 per month when you restart benefits at age 70, you will be getting $ 1,860 per month. If you live to age 90, you would earn about $ 32,400 more in lifetime benefits by suspending Social Security than if you had continued to claim your monthly checks for $ 1,500.

Of course, to achieve this you need to be comfortable funding your retirement on your own between your FRA and age 70. It is not an easy task for many seniors, but if you have substantial personal savings, this is the problem.

There is nevertheless a happy medium. You can suspend your benefits for a certain period of time and choose to restart them before the age of 70. Every year you delay increases your benefits by 8 percentage points, and even waiting a month will help your checks a bit.

Some warnings

In addition to saving for your retirement during the years when you suspend your benefits, you will also have to pay your Medicare Part B premiums out of pocket if you are already enrolled in Medicare. These normally come from your Social Security benefit, but if you don’t receive checks, the government should bill you for your premiums directly.

In addition, older people eligible for Supplementary Security Income (SSI) will not be able to claim these benefits if they suspend their social security checks. These people probably have an interest in not having their benefits suspended.

There is nothing wrong with continuing to claim your current Social Security benefit if you are comfortable with it, but suspension of benefits is an option worth exploring, especially if you don’t. didn’t know you compromised yourself by registering early. Play around with the numbers a bit and see how much social security suspension could help you.


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