Claiming Social Security at 65? You Might Regret That | Business News


The decision to claim Social Security is not one to be taken lightly. It is important to think carefully about your application before proceeding with it.

You may register for Social Security once you turn 62. And there is no financial benefit to delaying your application beyond age 70. So, for the most part, you’re looking at an eight-year window in which to apply.

In the center of that window is the age of 65. You may be inclined to claim benefits in conjunction with your Medicare enrollment at that point. But if you go that route, you may regret it for one big reason.

Image source: Getty Images.

Can you afford to reduce your benefit for life?

You are entitled to your full monthly Social Security benefits based on your pay history once you reach full retirement age, or FRA. But FRA doesn’t start at 65.

You might assume that 65 FRA is for Social Security purposes because that’s when Medicare eligibility kicks in. But although the two programs are related, they have separate rules. And as for Social Security, you won’t be eligible for your full monthly benefit until you’re 66, 67, or 66 years old and a certain number of months, depending on the year you were born.

Meanwhile, for every month you sign up for Social Security before FRA, your monthly benefit is reduced. Submitting a few months early may not get you that big of a hit. But if you were born in 1960 or later and have an FRA of 67, signing up for Social Security at age 65 could mean your benefits are significantly reduced.

At that point, you’re looking at about a 13.34% hit to your monthly retirement income. That is not such a small amount.

You may especially regret signing up for Social Security at age 65 if you don’t have a very large retirement nest egg and your monthly benefits are your main source of senior income. That’s why it pays to consider waiting until FRA — or even beyond — to file for Social Security.

Don’t get confused

If you enroll in Social Security and Medicare at the same time, your Medicare Part B premium costs are automatically deducted from your benefit. That saves you the trouble of having to pay those premiums manually.

But that’s not really a reason to claim Social Security up to two years earlier than FRA. Since it’s more than possible to just sign up for Medicare at age 65 and wait for Social Security, it’s worth considering if you don’t have many sources of retirement income available to you and expect quite heavy relying on your benefits to stay afloat.

Of course, it’s easy to see why some seniors get confused and assume they have to file for Social Security as soon as they’re ready for Medicare. After all, Medicare enrollment takes place on the Social Security Administration website.

But rest assured that you can only sign up for Medicare at the time of your 65th birthday. And waiting to claim Social Security could make for a much more flexible retirement financially.

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The Motley Fool has a disclosure policy.

The Valley Voice
The Valley Voice
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.


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