Are you considering claiming social security? Perhaps you’ve already filed and now wonder if it was too early. Maybe you’re waiting because you aren’t sure it’s the right time. These situations are common because, frankly, no one is educating the general public on how and when they should consider claiming their benefits.
While we advise you to reach out to a financial professional to discuss what works best for your circumstances, we’re sharing some thoughts to get you started. These should help you frame the way you think about your social security benefits.
Maximize Your Benefits
Your first tool in deciding when to claim social security is understanding how benefits are calculated. The Social Security Administration (SSA) figures the amount of your potential benefit based on 35 of the highest-earning years that you worked. If you have not worked a complete 35 years, the SSA will use a zero in place of the missing years, which will bring down your monthly benefit. If you can, it’s wise to fulfill all 35 years to receive the maximum benefit possible.
Although, working the complete 35 years is not the only way to maximize your benefits—delaying your social security benefits can have a significant effect as well. You can, of course, claim benefits at your full retirement age (which depends on the year you were born) for the full amount of your benefits. Or, for every year you wait after your full retirement age, you will receive 8% more in benefits each year, up to the age of 70. Learn more here about how claiming social security early or late affects your monthly benefit.
Don’t Take SSA Help at Face Value
The SSA is a useful resource for learning about your benefits; however, the administration is not held accountable for any advice they may give you. Consider that although an SSA employee would not knowingly give you incorrect information about your situation, they also may not have the training necessary to provide you with proper advice. Instead, contact a financial professional who can help you navigate the muddy waters of social security benefits.
Avoid Defaulting on Debt
Please note that your benefits can be garnished up to 15% to recoup defaulted loans. This is especially prevalent for parents and grandparents who have co-signed student loans that their children or grandchildren have defaulted on. To receive your full social security benefit, ensure that any debts you may have are up to date on payments.
Check Your Statement
Many Americans do not review their social security statements, assuming that the SSA has calculated their benefits correctly. As this isn’t always the case, checking your statement verifies that your benefits are accurate. You can register for an online account to learn more about your earnings record, your estimated benefits, and more. You can also reach out using your account to correct any errors.
Suspend Your Benefits
If you claimed your social security benefits early (before full retirement age) and now feel like that was a mistake, you still have options. If it has been less than one year, you can withdraw your application; however, you must pay back anything you’ve been paid thus far.
If it’s been more than one year and you have also reached full retirement age, you can suspend your benefits without paying any money back to the SSA. Suspending your benefits will increase your future payments by 8% each year that you delay benefits until the age of 70.
Here to Help
We understand that everyone’s financial and personal situations are different. It’s those differences that make social security decisions particularly difficult. It can also be stressful because how and when you begin receiving benefits can change the course of your life over the next several years.
Southwestern Investment Group’s advisors can help you determine which options will serve you best for the longest amount of time. We take your entire financial situation and your goals into account to create a sensible financial plan that works for you.
Contact us today to be connected with one of our trustworthy advisors in your area.
