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You Must Take A Broad View In Order To Optimize Your Benefits From Social Security

The amount of money you make throughout your 35 most productive years of employment that is, your lifetime wages determines the monthly Social Security benefit to which you are entitled. But the amount of money you receive from Social Security each month will also depend on your actual filing age. When you achieve full retirement age, or the FRA, you are entitled to your full monthly Social Security income based on your earnings history. FRA is 67 if you had your birthday in 1960.

If you were born before, it is either 66 or else 66 and a particular number of months. At FRA, you are not required to submit for Social Security. As as soon as age 62, you may apply for benefits, and if you wait until after FRA to file, your monthly benefit will be increased. You may select the filing age which will yield the most monthly benefit. However, concentrating on long-term Social Security income is more beneficial than monthly benefits.

Consider The Long Term

From a financial standpoint, it may seem senseless to postpone Social Security benefits past the Federal Retirement Age (FRA). Your monthly benefit increases by 8% for every year you postpone until you are 70 years old. Who wouldn’t like that boost? Let’s imagine you’re qualified for a monthly Social Security income of $2,000 at an FRA of 67. If you enroll at age 70, your monthly payment will be $2,480 instead. However, waiting to start receiving Social Security may increase your monthly income, but not necessarily your lifetime benefit. This is because life expectancy is unpredictable. Furthermore, delaying your filing may prove to be a bad financial move if you do not reside past a specific break-even point.

Your break-even point in this case is 82 ½. And at 82 1/2, regardless of when you began receiving payments from Social Security at age 67 or 70, you will have earned an overall of $372,000 from the program. However, due to a delayed filing, you would receive a lower lifelong Social Security income if you only live to be 79 years old. Thus, pursuing that increase would not be wise, for example, if you have health concerns that make you doubt your ability to live a long life. In fact, in certain situations, filing for Social Security early may be the greatest option if you’re afflicted with poor health as you approach retirement. If you start saving money early on and wind up dying young, you may be able to increase your lifetime income.

Challenging Choice To Make

Since nobody possesses a crystal ball & no one knows for how long they will live, choosing when to collect Social Security can be difficult. But the key is to remember to factor in your lifetime income in addition to your Social Security payment each month when choosing which form to file. If you prioritize the latter above the former, you may eventually determine the best age to enlist.

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