5 things to consider before you collect your Social Security benefits

If you’re approaching retirement, you’re probably thinking about when to start collecting your Social Security retirement benefits.

To help you make a more informed decision about when to claim, we created a new tool called “Planning for Retirement”. You’ll see how your claiming age affects your benefits and get tips relevant to your situation, which can help you start the conversation about your retirement needs and goals. We encourage you to try it out!

In addition to using the tool, consider these five tips to help you plan ahead and make the best decision for yourself and your family:

1. Know your “full retirement age”

The age at which you get your full retirement benefits from Social Security ranges from 66 to 67 depending on the year you were born. Claiming before your full retirement age leads to a permanent decrease in monthly benefits, while claiming after leads to a permanent increase. The full retirement age is the age at which you can start working and collecting simultaneously without facing a reduction in benefits.

Did you know? One recent survey found that seven in ten consumers believe that 65 is their full retirement age. In fact, the full retirement age actually varies depending on the year in which they were born.

2. Don’t claim early if you don’t have to.

Allowing your benefits to grow for one year makes a difference in your benefits. You’ll get an additional five to eight percent in monthly benefits for every year you wait to claim after age 62, maxing out at age 70. A higher monthly benefit could be important when you are older, which is when Social Security may play a more central role in your retirement income. At that point, your other sources of income and savings may be depleted and your health-related costs may be higher.

Did you know? You could see as much as a 30 percent reduction in monthly benefits by claiming before your full retirement age; whereas you can get as much as a 32 percent permanent increase (8 percent per year) by claiming after your full retirement age – up to age 70.

3. Know your retirement budget

Start with a simple budget that accounts for your income and expenses. Consider both your actual income and expenses before retirement and your expected income and expenses after you retire. This can help you understand how a reduced or increased benefit will affect your ability to meet your needs in retirement. In addition, this kind of budgeting can help you decide if you should reduce your expenses and pay off any debts before retiring.

Did you know? Retirement years may be more expensive than retirees expect, as many will incur increased health and housing expenses in their later years, and many carry mortgages and other debts into retirement .

4. Keep working if you can

Staying in the workforce – full or part time – for even one or two additional years can earn you an even bigger increase in your Social Security benefit by replacing years with low or no earnings from your earnings record. Working longer also gives you more time to save for retirement.

Did you know? Many people (45%) believe that their benefits are based on how long they work as well as their pay during only the last five years of employment, when in fact they are based on their highest 35 years of earnings.

5. Consider your spouse’s long-term needs

Your decision of when to claim your Social Security benefits could affect the benefits your spouse will receive after you die. Because surviving spouses receive the higher of the two spouses’ benefits, it often makes sense for higher earning spouses to claim at or after their full retirement age to get their full or highest possible benefit. This can minimize the reduction in income a surviving spouse may experience. Talk to your spouse about your claiming options so you can make this important decision together.

Did you know? On average, a married couple reaching age 65 can expect that one spouse will outlive the other for about 10 years or more .

Do you need more information to help you decide when to claim Social Security? Before you claim, check out “Planning for Retirement”: www.consumerfinance.gov/retirement/

To get more facts about Social Security, check out our factsheet .

The Retirement Tool is also available in Spanish

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