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Do not sign up for Social Security until you've answered these 3 questions – The Motley Fool

The opportunities for social security will play a big role in your pension finances. That's why you must be strategic in claiming benefits. Here are three key questions that you should answer before you think about the submission.

. 1 Did I reach the full retirement age?

Your social security benefits are calculated on the earnings you earned during your time in the workforce (especially your highest paying 35 years in the workplace).

  Mature couple at the table with calculator and papers in front of it

Source: Getty Images.

If you sign up for Full Retirement Age (FRA) benefits, you will receive exactly the monthly benefit you are entitled to through your earnings. Your FRA depends on your year of birth as follows:

Year of birth

Full retirement age




66 and 2 months

1956 [19659010] 66 and 4 Months


66 and 6 months


66 and 8 months


66 and 10 months



Data source: Social Security Administration ,

That means you can apply for social insurance at the age of 62. However, if you avail yourself benefits before the FRA, this will most likely lead to a reduction of your monthly income from social insurance a permanent one. The extent of this reduction depends on your FRA and how early you submit, but in the extreme case (filing at 62 for a FRA of 67) this can be up to 30% less. Therefore, it is often worthwhile waiting for the FRA to claim benefits, unless you have a compelling reason to file earlier.

Are my savings healthy?

Ideally, social security should only make up part of your total pension income. But if you do not have a lot of savings, that could be the bulk of it. If so, it may not make sense to claim full retirement benefits. Rather, they should consider postponing benefits beyond the FRA. For each year that you hold back, you will receive credits that increase your benefits by 8% per year until the age of 70. At this time, this incentive is used up. Be sure to check your savings before applying for social insurance. If your nest egg is not too big, delaying and growing your performance could be the best way to save your retirement.

. 3 Do I want to keep working?

A nice feature of social security is that you can work and receive benefits at the same time. You may need these benefits to supplement your income later in life, especially if you are forced to reduce your working hours due to health problems. Or you just want to use these benefits to enjoy life while you're a bit younger.

However, if you apply for benefits from the FRA, there is a risk that part of it will be withheld if your income exceeds a certain threshold. This limit will change from year to year, but in 2019 you will receive $ 1 in benefits for every $ 2 you earn over $ 17,640. The only exception is that you will reach FRA later this year. In that case, you can earn up to $ 46,920 without affecting your performance. From then on, you have $ 1 in social security for every $ 3 you earn. The Social Security Board inserts them into your monthly payments as soon as you reach FRA. But the reduction in benefits that you must suffer through early filing will be money that you will lose forever. So, if you want to continue working and expect a decent living, it might be worth it to hold back the assertion benefits until you reach FRA. At this time, you can earn as much as you want, and you can still fully earn your benefits.

The decision to apply for social insurance is not an easy decision. Make sure you can answer these three questions before signing up.

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