If you are reaching sixty-six this year, you may be anticipating, if you haven’t already, being able to start collecting Social Security benefits. Unfortunately, you may not be conscious of it, but you have been the victim of a benefit cut. Legislators have not approved this cut in prior years. Rather, it stems from Social Security changes that were enacted throughout the 1980s. Nonetheless, it’s critical that you are aware of and comprehend how the new regulations will impact you to make well-informed decisions regarding your Social Security benefits.
Social Security Benefits; Source-Money
Social Security Benefits Reduced
There’s a straightforward explanation for why Social Security benefits for everyone approaching 66 this year will be reduced. A statute aimed at strengthening Social Security’s budget started to gradually postpone the full retirement age in 1983. The age at which you are eligible to start receiving the standard benefit based on your career’s average salary is known as full retirement age or FRA. The 1983 modifications modified it for anybody born in 1943 or after; it was previously 65 for everyone. The transition to FRA was implemented gradually, allowing individuals born between 1943 and 1954 to begin claiming their standard pension at age 66.
Social Security Benefits At Age 66
After that, the FRA would advance by two months for everyone born in 1955 or later, making 67 the full retirement age for everyone born in 1960 or after. Your full retirement age will therefore be later than that of everyone who reached 66 before you if you turn 66 this year. In contrast to your friends who turned 66 last year, who only were able to wait until age 66 and 6 months, you will now need to wait until you turn 66 years and 8 months old to receive your first Social Security check unless you are not interested in your benefits to be cut by early filing penalties. Waiting a few more months for your first Social Security payout may not seem like a huge issue. But that’s a few thousand bucks you won’t have if you have to forgo two months of pay.
Claiming Social Security Benefits Before FRA
Furthermore, you will be subject to early filing penalties if you file for benefits earlier than 66 and 8 months. These penalties will lower your payments by 5/9 of 1% for the first 36 months that you claim benefits before FRA (plus an additional 5/12 of 1% per month if you file for benefits earlier than 36 months). This decrease can accumulate throughout your life. In actuality, reaching full retirement age results in a reduction in your lifetime benefits. You are left with no choice but to determine whether it is wise to wait an additional two months to apply for benefits. However, you should be mindful of it as you plan for retirement and think about how Social Security will help you in your later years.
