It is well known that the longer seniors wait to receive retirement benefits from the Social Security Administration (SSA), the more money they have in their monthly checks.
Financial experts frequently advise Americans to wait until they reach their full retirement age (FRA) before claiming Social Security benefits.
While it is permissible to begin taking the money at age 62, this is not considered the FRA, and those who did so would not receive the full extent of their benefits.
But what determines the FRA for 100% benefits?
It remained 65 for several years before Congress made changes in 1983.
It was then raised gradually to account for potentially longer life expectancies.
Since then, the FRA has gradually increased every two months, depending on a senior’s birth year and month.
For those born between 1955 and 1959, the FRA is between 66 and 67.
Those born in 1957 reached their FRA at 66 years and six months, which began in 2023.
According to CBS News, if you were born a year later in 1958, you would be 66 years and eight months old when the FRA goes into effect in September 2024.
As of May, those born in 1959 have reached the age of 66 years and 10 months.
That means people born that year can receive FRA benefits between March 2025 and January 2026.
It is ideal to use the
Exactly when that happens will be determined by their birth month.
HOW TO SUPPLEMENT YOUR SOCIAL SECURITY
Here’s how to supplement your Social Security:
Given the uncertainty surrounding Social Security’s long-term future, it’s essential for workers to consider ways to supplement their retirement income.
Senior Citizens League executive director, Shannon Benton recommends starting early with savings and investing in retirement accounts like 401(k)s or IRAs.
- 401(k) Plans
- A 401(k) is a retirement account offered through employers, where contributions are tax-deferred.
- Many employers also match employee contributions, typically between 2% and 4% of salary, making it a valuable tool for building retirement savings.
- Maxing out your 401(k) contributions, especially if your employer offers a match, should be a priority.
- IRAs
- An Individual Retirement Account (IRA) offers another avenue for retirement savings.
- Unlike a 401(k), an IRA isn’t tied to your employer, giving you more flexibility in your investment choices.
- Contributions to traditional IRAs are tax-deductible, and the funds grow tax-free until they are withdrawn, at which point they are taxed as income.
Anyone born in 1960 or later must be at least 67 years old to receive the FRA.
The current average FRA amount is around $4,018, but this varies by case.
Those born in 1959 would be better off waiting for their FRA this year.
According to Pinecrest Lake, if they had obtained it at the age of 62 instead of waiting, their benefits could have been reduced by up to 29.17 percent.
WAITING GAME
Even FRA is not the best time for those looking to maximize their Social Security benefits.
If an American decides to continue waiting to take benefits, amounts will still increase until 70, when they are maxed out, thanks to “delayed retirement credits” from the Social Security Administration.
According to Gal Wettstein, a senior research economist at Boston College’s Center for Retirement Research, 70 is typically the best age to begin receiving Social Security benefits for relatively healthy adults.
“I am not in the advice-giving business, but I can say things about averages,” Wettstein told USA Today.
“When you just look at averages, you are better off postponing claiming until as late as possible, until 70.”
WHY SO IMMEDIATE?
Nonetheless, according to a Bankrate study, most Americans begin receiving benefits at the age of 62, rather than FRA or 70.
Robert Brokamp, senior adviser at The Motley Fool, and Monique Morrissey, senior economist at the Economic Policy Institute, identified two key reasons for this shift.
Americans who took the benefits right away either did not expect to live long or were desperate for the money.
“Many people do not have enough savings,” Morrissey told the paper.
“And it also makes people nervous to draw down their savings, even if it is the right thing to do.”
Not to mention, SSA funds are still expected to run out soon, with retirees receiving only 83% of them by 2035 unless changes are made, according to CNBC.
Approximately one million Americans have yet to receive their “Fairness” increase for Social Security as of this month.
Seniors are also experiencing lengthy application delays, with one woman recently told she would have to wait 230 days for a review.
