Retirement can be expensive, and many Americans rely on Social Security to support them financially. According to a 2024 report from the Transamerica Center for Retirement Studies, 43% of baby boomers expect Social Security to be their primary source of income in retirement.
Whether you plan to retire in 2025 or have years left in your career, understanding how Social Security fits into your financial future is crucial. One essential step can help you maximize your benefits and avoid costly mistakes.
The One Number Every Worker Should Know
Checking your estimated benefit amount through your mySocialSecurity account is a great first step. However, knowing your Full Retirement Age (FRA) is even more critical.
Your FRA is the age when you can start collecting your full Social Security benefit based on your earnings history. Many workers mistakenly believe their FRA is 64 years old, but it actually falls between 66 and 67, depending on your birth year. If you claim benefits earlier than your FRA, your monthly payments will be permanently reduced.
How Claiming Early Reduces Your Benefits
If you claim Social Security before your FRA, your benefits decrease significantly:
- Claim at 64 (with an FRA of 67) – a 20% reduction
- Claim at 62 – a 30% reduction
For example, if the average retiree receives $1,975 per month, a 20% reduction means losing $395 monthly or $4,740 annually. A 30% reduction results in $593 less per month, amounting to $7,100 per year.
When Claiming Early Might Make Sense
While delaying benefits can maximize your monthly income, there are situations where filing early is beneficial:
- Health Concerns: If you have a shorter life expectancy due to health issues, it might be wise to claim benefits earlier.
- Lifestyle Choices: Some retirees want to enjoy an active lifestyle in their early 60s rather than wait until later.
- Spousal Strategies: If both you and your spouse qualify for Social Security, one may claim early while the other delays for a higher benefit.
Make an Informed Decision
Understanding your FRA and how it affects your benefits allows you to make a well-informed retirement decision. Social Security is a vital source of income for millions of retirees, and knowing when and how to claim can help you achieve financial security in retirement.
If you haven’t already, check your Social Security benefits online and plan your retirement strategy wisely. The right move today can make a significant difference in your future income.
Disclaimer: This article has been meticulously fact-checked by our team to ensure accuracy and uphold transparency. We strive to deliver trustworthy and dependable content to our readers.
Benjamin Ford is a dedicated local journalist passionate about reporting on community news, events, politics, crime, and finance. With a sharp eye for detail and a commitment to uncovering impactful stories, he provides in-depth analysis and timely updates on issues that matter to the local audience. Benjamin enjoys engaging with the community and staying informed on emerging trends when he’s not covering the latest developments.
