Social Security is expected to go through numerous changes in the upcoming years. Benefiting nearly 70 million people, the Social Security Administration and its associated programs is one of the most well-known and important governmental assistance programs. However, with news surrounding the increases in the retirement age of Social Security, it can be confusing if you are nearing the age of retirement but are unsure whether you can start claiming your benefits yet.
Social Security retirement age: When can you claim benefits?
According to the official Social Security Administration website, the normal retirement age (NRA) is the age from when you can start receiving your full benefits from the retirement program. Currently, many people still have the assumption that the NRA is set at 65 years old. However, this has not been the case since 1938 despite 65 being the age that the majority of people do retire at.
Currently, the NRA that applies to you depends on when you were born. Currently, anyone born in 1960 and later has an NRA of 67. However, your NRA differs for each year before 1960. This is because the change in the NRA was slowly implemented over several years, which meant it increased slightly each year. The reason the NRA was increased was to account for the population living longer to preserve the longevity of the retirement fund.
Deciding when to claim your benefits
You can start claiming Social Security benefits as early as 62 years old. However, if you claim before the NRA, you will receive fewer benefits than if you had waited until reaching or NRA. It is important to consider long before you reach 62 what you are going to do about Social Security and structuring your financial planning and wealth management around that.
“Waiting until 70 certainly has its benefits: a higher initial monthly payment, which means greater cost-of-living (inflation) adjustments (since they are a percent), and one that people may overlook is higher survivor benefits for the surviving spouse, if applicable,” says Stephanie McCullough, founder and financial planner at Sofia Financial. “Even if the higher-earner in a couple may not live terribly long, their benefit amount will determine how much the widow(er) receives for the remainder of their life, which can have a big impact over the years.”
One of the biggest recommendations McCullough has when it comes to financial planning is that you should always ensure that you keep your fixed expenses as low as possible: “One of the most helpful things all of us can do, which serves us well in a multitude of situations, is to try to keep our fixed expenses as low as we can. Those hard-to-change repeated regular costs like housing, car payments, utilities, and monthly bills,” McCullough says. “I’m not saying you shouldn’t enjoy your life–quite the opposite! If you keep those fixed costs low, you have more room for discretionary fun stuff, as well as to adjust to any exogenous shocks life throws at you.”
Social Security benefits could be increased
While the longevity of the retirement fund is currently under scrutiny, there has been talk that certain individuals may receive an increase in their benefits. A survey by the National Academy of Social Insurance shows how the following groups of individuals have widespread support from participants with regard to increasing their Social Security benefits:
- Parents with children under the age of six
- Retired workers who worked a physically demanding job
The reason for the support to increase the benefits for these individuals is because they often miss out on working years to contribute towards their retirement. Parents with young children often have one person stay at home, while individuals who work physically demanding jobs often have to retire early. The support by the participants indicates widespread approval to help these individuals bridge the gap between those years they cannot work.
