Only 35% of Social Security recipients file at Full Retirement Age (FRA), yet most of them should… This short video will help you make the decision about when to file for this important part of your retirement income.
Questions to Ask A Financial Planner to Determine if They Know How Social Security Really Works
Please explain what the best age is for me to file for Social Security and Why?
Please explain provisional income to me.
What is the best age for my spouse to file for Social Security if her/his retirement benefit is less than half of mine?
What are Social Security Credits and how are they calculated?
What is a Social Security Breakeven Analysis and is this a good way to determine when to file?
Do I need to file for for Social Security for my spouse to receive spousal benefits.
What is the Survivor Benefit and how is it determined?
What is the payout percentage difference between filing at full retirement age and minimum filing age?
Note: If you financial planner does not know the answer to these basic questions, I recommend that you move on to someone who does.
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Disclaimer: this video is for educational and entertainment purposes only and is not meant to be a substitute for legal, accounting, tax, or professional advice. If you have any specific questions about any legal, accounting, tax or other professional service matter you should consult the appropriate professional services provider….(read more)
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When Filing for Social Security at Full Retirement Age (or Later!) Is Your Best Choice
Social Security is an important program that provides financial support to retired individuals, disabled citizens, and surviving family members. While the decision to file for Social Security benefits can depend on various factors, it is crucial to understand the benefits of waiting until your full retirement age or even longer before filing. By delaying your claim, you can significantly increase your monthly benefit amount and secure a more financially stable future.
Firstly, let’s clarify what full retirement age (FRA) means. FRA refers to the age at which you are eligible to receive full Social Security benefits based on your date of birth. For individuals born between 1943 and 1954, the FRA is 66 years old. However, if you were born in
or after 1960, your FRA is 67.
Many individuals choose to file for Social Security early, starting at age 62, as soon as they become eligible. While this option may seem tempting, it comes with substantial drawbacks. If you file for benefits before reaching your FRA, you will face a permanent reduction in the monthly amount you receive.
For instance, let’s assume that your FRA is 66, and your expected monthly benefit at that age is $1,000. If you file for Social Security at age 62, your monthly benefit will be reduced by 25% to $750. This reduction lasts for the rest of your life, unless you decide to withdraw your application and repay the benefits you have received.
On the other hand, if you choose to delay filing for Social Security, you will experience a significant increase in your monthly benefit. For each year you delay after your FRA, your benefit amount grows by a certain percentage. This additional amount, known as the delayed retirement credit, is added to your benefit calculation.
For individuals born between 1943 and 1954, the delayed retirement credit is 8% per year. Therefore, if you wait until age 70, you will receive a 32% increase in your monthly benefit. Considering our previous example, this would boost your monthly benefit from $1,000 to $1,320.
Delaying your Social Security claim can be particularly beneficial if you are in good health and expect to live a longer life. By receiving a higher monthly benefit, you can better cover your expenses during retirement and potentially avoid financial strains in old age. Additionally, the higher benefit amount may provide more protection against inflation and rising living costs, allowing you to maintain a comfortable standard of living.
Moreover, if you continue working and earning income past your FRA while receiving Social Security benefits, an earnings test may limit how much you can earn before facing a reduction in benefits. However, this reduction is temporary and will be compensated for in the future, generating higher monthly payments later on.
Of course, there are also situations where filing for Social Security benefits early may make sense, such as if you have pressing financial needs or a shorter life expectancy due to health conditions. In such cases, it’s important to weigh the pros and cons and consider all the factors before making a decision.
In conclusion, for most individuals, waiting until full retirement age or later to file for Social Security benefits can be a wise and financially beneficial choice. By delaying your claim, you can secure a higher monthly benefit, which will enhance your financial stability and provide a more comfortable retirement. Take the time to carefully consider your situation and consult with a financial advisor to determine the best strategy for maximizing your Social Security benefits.
I think genetics has some input into longevity. My paternal grandfather passed at 89 at the 7th heart attack. My mom passed months after turning 89. And my father just turned 91 and never had a heart attack and is in good health for his age. I’m considering filing at my FRA or age 70.
I disagree with using age 78 as an age of death. The age of death s/b in the 80's , since your expected age of death increases for older people. In addition, the age of death is more like 92 when discussing a survivor of a couple. Running out of money because you lived too long is a big problem compared to dying earlier and not optimizing your Social Security. You won't care that you didn't optimize because you are no longer around.
Geoff, I've alway taken the view that I'd rather keep 88 cents and pay 22 cents in taxes on every dollar of investment profits. So, I can't buy the "my investments paid out too much" concept, simply to avoid paying my 22 cents. Aren't I still ahead by 88 cents?
I retired 7 years ago at age 62 and began taking my SS at the time. The idea that you get more money by waiting is a flawed premise. SS will give you three options. For me is was 62, 66 and 70 so I ran the numbers. You will find that all three amounts come even at around 80 years of age (79 years 9 months for me) The only way anyone can know the right choice if you only consider raw dollars it to know the exact date of your death. Since I didn't have that information I considered my family history. My dad died when he was 80. He did have a brother who lived to 87, but he also had a brother and a sister who died in their 60's. I then considered the value of time. Basically would I rather have more years of retirement when I was young enough to enjoy it, or more money when I was almost 80. I took the time because time is the one thing that is more valuable than money. Just turned 69 and taking my SS at age 62 was the second best decision I have ever made. My best decision was marrying my wife of going on 48 years.
I am receiving conflicting information from the You Tube community about spousal benefits. If my wife takes her Social Security benefit of $200 at age 62. Will her spousal benefit ( approximately 1550) at age 67 be reduced? From what I can determine at 67 she will will get her $200 benefit plus $1350 bump up to meet the $1550 spousal benefit. We are three years apart, so when I’m 70 I’ll start my benefit’s, she will be 67 and eligible to receive the spousal benefit then. None of the informational videos talk about such a wide dollar gap in benefits, any thoughts would be great.
Ray
Very Informative. Can you help in this specific instance.
My FRA would be this year( 2023) in JULY but I will begin receiving my SS in March of this year (four months early of FRA). I also want to continue working until Sept. of this year. By the end of Sept I will have made 50,000. Will I have to pay any penalties'?
Comment thread is full of bad math, bad assumptions and bad attitudes.
I had NO idea all of you hated working so much.
What miserable lives you have led.
Living in misery waiting for that day "when I can REALLY start living".
Sad and tragic.
This is great for people who haven’t been forced into retirement by the corporate world. Ageism in America is an increasingly devastating reality for many. This is particularly true for women, who have traditionally earned less and grew up during the 60’s-80’s, where economic opportunities for women weren’t available. If someone is lucky enough to wait, that’s great. For me, I’m collecting earlier and leaving the US to live a better quality of life in another country. It’s just not that simple to wait for some of us.
The "Life Expectancy" you give is an overall average. If you were to ask what the life expectancy of someone 60 years old in the us, that age is about 85. I am 60 now, and anyone asking when they should take their Social Security should take this into consideration.
Big ups to everyone working effortlessly trying to earn a living while building wealth. I’m 50 and my wife 44 we are both retired with over $3 million in net worth and no debts. Currently living smart and frugal with our money. Saving and investing lifestyle made it possible for us this early even till now we earn monthly through passive income.
Thanks to fire movement. //)
What my judgement is made on….can I afford to live. I could give a s# about getting my money back. I need to be able to afford to live. I am planning on age 70
Wait till 70 unless u sick and can't work it's better to get more cuz u might live to 90
If I am eligible to get $853 of SS at age 62 and $1200 at age 67, does it mean that I wouldn't feel the impact of the difference until age 79? Meaning the extra $51k in benefits I get over those extra 5 years of collecting $853 between age 62 and 67, would take another 12.3 years until I would use up those extra earnings? Are my calculations correct?
I have watched many videos about the "right" age to begin collecting Social Security. When I look at my SS statement it seems so obvious that the best age is 70. I'm 66, my benefit today would be $3,313. If I wait until I'm 70 it will be $4,342. Am I missing something?
I took SS early in 2008. But the market was down and I was an income investor. I used SS to pay bills while I bought things like Ford preferred stock, as an example, around $10, Par$25. I was getting a yield like %25 on preferred stocks. Just saying that when you take SS is situation oriented.
Jeff, I am about 2 months away from FRA. Do I have to wait until then to start my filing or can I start it early? I am a subscriber and really appreciate your excellent presentations. Thank you for sharing.
I love this guy. Why pay 1% to a “financial advisor” when you can get this stuff for free!
Great video,
Do you know anything about filing tax charity donations? I am trying to find out what is the max. about you can claim. I know you can file up to $300 cash charity donation. But what about other items that are valued at more than $300. For exp. if I donate a car that is valued at $10,000 how do you file it on income tax?
There are very few instances where it makes sense to file before you are 70. Why would anyone want a small check???
Thanks for making these presentations. They are very, very helpful.
At full retirement age continuing to work full time. Can you collect social security without going on Medicare ? The full time job includes medical insurance and there is a need to cover a dependent as well.