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The Big Question You Must Face Before Submitting for Social Security – The Motley Fool

Some seniors can not wait to get their social security income into their hands, so much so that they apply for benefits at the earliest possible age of 62. Then there are those who, for as long as possible, refrain from taking benefits Increase them for the rest of their lives.

The decision to apply for benefits should not be taken lightly, as the age at which you first claim benefits will affect your final payout. If you apply for benefits when you reach retirement age, you will receive the exact amount you are entitled to based on your earnings record. The full retirement age is based on your year of birth as follows:

Year of Birth

Full Board





66 and 2 months


66 and 4 months


66 and 6 months


66 and 8 months


66 and 10 months



Of course, you can apply for benefits at the age of 62, but you can reduce it by 6.67% per annum and then by 5% each year for the first three years you enroll early. This means that if you are looking for a full retirement age of 67, but claim benefits of 62, you will reduce it by 30%. In addition, your benefits will not be refunded after reaching full retirement age. This reduction will remain in effect for the rest of your life if you do not cancel your Social Security application within one year and repay every cent you receive.

  Smiling senior couple for jogging.


Then there is the other side of the coin: Benefits are deferred beyond the full retirement age and increased by 8% per year, which is possible up to the age of 70. There is no longer any incentive to wait, which is why this is generally considered the newest age when social assistance is requested, although nobody will force you to.

Now there are several factors that will undoubtedly go into your decision when to file. If your Nest egg is underfunded, you can choose to stay on Social Security for as long as possible and compensate for your benefits. And if you have a few million dollars in your 401 (k), you could choose to take advantage early and enjoy that money as long as you are young enough to make the most of it.

But there is one fundamental question that you need to ask yourself before you claim benefits, regardless of what your financial picture looks like: "How is my health?"

Making the Most of Social Security

Why should your health be an important factor when it comes to it? The reason for this is the fact that social security aims to give you the same total life expectancy, regardless of when To submit you the first time. The logic is that a reduction in the early submission payments will be offset by the higher number of payments, and vice versa – if you submit after retirement, you will earn less, but each payment will be more robust. 19659002] However, this formula depends on a key factor – that you have an average life expectancy. So, if your health is not good, it's worth calling for benefits as early as possible. The opposite is the case when your health is excellent – there is a good chance that you will get more from social security by waiting.

Imagine your full retirement age is 67, by which time you are entitled to $ 1,600 per month in benefits. If you submit at 62, any payment you collect will be reduced to $ 1,120, but you will collect another 60 payments. If you live to over 78 1/2, you'll come in for about $ 223,000 in both scenarios. But if you die at age 72, which is relatively young, you'll get out by $ 38,000 in advance by filing at 62 instead of waiting until you reach retirement age.

Now let's do the reverse scenario. Imagine, your health is fantastic, you delay your accomplishments up to the age of 70, increasing your monthly payments to $ 1,984. If you live to 82 1/2, you'll break at $ 297,600, whether you're 67 or 70. But if you reach 90 (which, according to the Social Security Administration, makes one out of 10 seniors reaching 65)), you will have about $ 34,500 more if you wait as long as possible.

Of course, in the absence of a crystal ball, it is impossible to predict how long you will live. But you know that the better your health is, the better it is to wait for benefits. So when you think about filing, you should ask yourself how you physically behave, and whether you are ready to hold on to your most critical pension income stream.

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