HOUSEHOLDS planning to claim social security will want to avoid a costly move that could cut their benefits by almost $500 a month.
The benefits are given to elderly and disabled Americans to support them in retirement and with extra living costs.
We explain a social security move could cost you almost $500 per month in benefits[/caption]
The average claimant currently gets $1,543 a month – $2,352 less than the maximum available of $3,895 in 2021.
To receive the full amount, you’ll need work at least 35 years, boost your earnings and wait until your full retirement age (FRA) to begin claiming.
You can start claiming benefits before your FRA at the age of 62, but your benefit amount will be reduced for each month that you claim early.
And if you claim as early as possible when you hit 62, your monthly benefit amount will be slashed by up to 30%.
What are social security benefits?
SOCIAL security payments are made to retirees and their families, as well as to disabled people and their families.
But crucially, you have to have worked and paid into the Social Security scheme for long enough to get these benefits.
Survivors benefits are also paid to the families of workers who have died.
Social Security payments are funded through taxes taken under the Federal Insurance Contributions Act (FICA) or the Self-Employment Contributions Act (SECA).
Here’s how to apply for Social Security.
For anyone born in 1960 or later, your FRA is at the age of 67.
While claimants before 1960 have an FRA of either 66 or 66 and a few months, depending on the year you were born.
You can calculate your FRA on the Social Security Administration website.
As an example, let’s say you have an FRA of 67 years old, and by claiming at that age, you’d get $1,543 a month in benefits.
If you instead claim at the age of 62, the standard 30% reduction will leave you with just $1,080.10 per month.
This is $462.90 less per month compared to if you waited to claim until the age of 67.
In other words, if you can afford to wait another five years, it’s worth doing as your monthly check will be a lot bigger.
This is especially handy if you expect social security to be your main or only income in retirement.
You can delay your claim by working for longer, while others may have additional retirement savings to rely on.
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Social security payouts for nearly 70million Americans may rise by 6.1% next year, triggering the biggest surge in 40 years.
Meanwhile, Suze Orman recently urged households to delay their benefit claims too.
We reveal a simple trick that can boost your social security payments by $600.
Source: The Sun
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