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Find Out Which One is Better: Claiming Social Security Benefits Before Or After FRA

Social Security Benefits
Social Security Benefits; Source- MARCA

Based on your individual wage history, Social Security will determine how much money you receive each month. Instead of providing a single, lump sum payment, the program determines each participant’s payout based on their 35 highest-earning years of employment.

Social Security Benefits

Social Security Benefits; Source- CNET

Amount Of Social Security Benefits Per Month

However, the amount of money you receive from Social Security each month will also depend on your age when you first apply for those benefits. Additionally, you will be eligible to receive your entire monthly payment based on your earnings history if you hold off until you reach full retirement age (FRA), which is 67 if you emerged in 1960 or later. Though at a lower level, the SSA permits seniors to begin receiving benefits at age 62. Enrolling in benefits at age 62 may let you take a few years off from your career. Additionally, it can enable you to travel when you possess the energy to do so.

Social Security Benefits At Age 62

Although it makes sense to desire to start collecting Social Security at age 62, doing so could seriously jeopardize your retirement years later. Ideally, you will have worked hard to accumulate a nest egg that will support you during retirement. Perhaps that nest egg will provide a $500k profit. It might be valued at $1 million. In any case, there’s no assurance that your funds will endure as long as you require them to. By taking cautious withdrawals from your nest egg, for example, you can lessen the chance that you will run out of funds. Still, you never know when a weak market could make your money disappear sooner than you thought.

Increase In Social Security Benefits After FRA

Simply put, you could find that you live a lot longer than you had imagined. Given the seeming dictate of your family history, you might expect that you’ll persevere until you’re in your late 80s. It makes more sense to file for Social Security later rather than early. If your savings run out, you will have less income available if you start collecting benefits at age 62 and reduce them along the way. That would put you in a position where you would have to reduce your spending during a difficult moment in your life. Your monthly benefit will increase by 8% for each year you wait over the Federal Retirement Age (FRA) until you are 70 years old.

You will therefore be able to purchase yourself a great deal more financial security if you can hold off on receiving benefits until after you turn 70. However, it might not make sense to wait until you turn 70 to start receiving benefits if you had always intended to retire sooner. If so, waiting until FRA arrives before beginning benefits is a good compromise. At that point, you won’t receive a larger monthly payment, but you also won’t have to take a pay cut from Social Security as you would at age 62.




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