As retirement savings fall short for many workers, Social Security benefits can be a crucial source of income. However, there are hidden factors that could reduce the amount you receive, impacting your financial security during retirement. Discover two sneaky ways you may be missing out on your hard-earned benefits.
- Ignoring Your Full Retirement Age (FRA) Knowing your Full Retirement Age (FRA) is essential to maximize your Social Security benefits. FRA is the age at which you’ll receive the full benefit amount based on your work history. Many mistakenly assume their FRA is 63 years old, but for those born in 1960 or later, it’s age 67. Claiming benefits before your FRA (as early as age 62) can lead to a significant reduction in your monthly payments, up to 30% less. Waiting until age 70 to claim benefits can result in a higher payout, with at least 24% extra each month. Shockingly, only 13% of U.S. adults can correctly name their FRA based on their birth year, potentially leading to inadvertent early claims and permanently reduced benefits.
- Overlooking Other Entitled Social Security Benefits While retirement benefits are the most common, you might be eligible for additional benefits if you’re married, divorced, or widowed. Spousal benefits can be claimed if you’re married to someone receiving retirement or disability Social Security benefits. Divorce benefits are available if your previous marriage lasted for at least 10 years, and you’re not currently married. Survivors benefits are reserved for widows and widowers, but sometimes available for divorced spouses, parents, children, and other family members. These benefits could provide additional financial support beyond your own work record.
For spousal and divorce benefits, the maximum you can receive is 50% of your spouse or ex-spouse’s FRA benefit amount. If you’re already receiving more based on your own work record, you won’t qualify for these additional benefits. Survivors benefits’ amount depends on various factors, but if you’re widowed, you could collect the full benefit amount of the deceased.
To ensure a financially secure retirement, it’s crucial to know your FRA and understand how your claiming strategy impacts your benefit amount. Moreover, explore all the Social Security benefits you may be entitled to based on your marital status and family situation. Maximizing your monthly payments can make a significant difference in your quality of life during retirement.
