Current:Home > Stocks3 Social Security rules you need to know before claiming benefits-DB Wealth Institute B2 Expert Reviews
3 Social Security rules you need to know before claiming benefits
View Date:2024-12-23 19:51:20
If you're gearing up to claim Social Security, you may be excited to finally get some money out of the program you've been paying into all of your life. But it's important to have a good understanding of how Social Security works before signing up to get benefits. With that in mind, here are three basic rules you should commit to memory before putting in your claim.
1. How benefits are calculated
Your monthly Social Security benefit is calculated by taking your 35 highest-paid years of earnings and adjusting them for inflation. Your filing age will also play a role in determining how much monthly income Social Security gives you.
If you're nearing the end of your career and have not yet put in 35 years in the labor force, you may want to consider working a bit longer. Doing so could replace a year of zero earnings with an actual salary, resulting in a higher ongoing monthly payday.
Similarly, you may want to consider waiting until at least full retirement age (FRA) to sign up for Social Security. That's the age at which you're eligible for your monthly benefit in full based on your income history, and it's either 66, 67, or somewhere in between.
You're allowed to file for Social Security as early as age 62. But filing ahead of FRA will mean reducing your monthly benefit for life.
2. How delayed retirement credits work
We just learned that your complete monthly Social Security benefit based on your income history is yours once you reach FRA. But there's a financial advantage to delaying your filing.
For each year you hold off on claiming Social Security past FRA, you accrue delayed retirement credits that boost your monthly benefit by 8%. So if your FRA is 67, you have the potential to raise your monthly payments by 24%.
Those credits, however, stop accruing once you turn 70. So for this reason, 70 is generally considered the latest age to sign up for Social Security, even though you technically won't be forced to claim benefits at that point.
3. How Medicare works with Social Security
Medicare eligibility begins at age 65, which could be up to two years before your FRA arrives. You should know that you can absolutely become a Medicare enrollee without signing up for Social Security. Doing so could be beneficial, in fact, since that way, you get health coverage at 65 but don't end up slashing your monthly benefit in the process.
Incidentally, you can also sign up for Social Security without becoming a Medicare enrollee. As mentioned earlier, Social Security becomes available to you once you turn 62. If you have a reason for filing early, you may decide to do so and sign up for Medicare a few years later.
Know the rules
Your Social Security filing decision could impact your retirement finances for many years to come. Read up on the rules before moving forward so you don't end up regretting your claiming decision after the fact.
The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
Offer from the Motley Fool:The $22,924 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
View the "Social Security secrets"
veryGood! (6)
Related
- Mike Tyson vs. Jake Paul stirs debate: Is this a legitimate fight?
- Head-on crash kills 6 and critically injures 3 on North Texas highway
- Gaming proponents size up the odds of a northern Virginia casino
- 'Pretty Baby' chronicles Brooke Shields' career and the sexualization of young girls
- Arbitrator upholds 5-year bans of Bad Bunny baseball agency leaders, cuts agent penalty to 3 years
- Tom Smothers, half of the provocative Smothers Brothers comedy duo, dies at 86
- Michigan Supreme Court rejects bid to keep Trump off 2024 primary ballot
- Barbra Streisand says she's embracing sexuality with age: 'I'm too old to care'
- Fate of Netflix Series America’s Sweethearts: Dallas Cowboys Cheerleaders Revealed
- Neighboring New Jersey towns will have brothers as mayors next year
Ranking
- Jamie Lee Curtis and Don Lemon quit X, formerly Twitter: 'Time for me to leave'
- Florida teen fatally shoots sister after argument over Christmas presents, sheriff says
- Gypsy Rose Blanchard set to be paroled years after persuading boyfriend to kill her abusive mother
- The Chosen: A Jesus and his disciples for the modern age
- 'Squid Game' creator lost '8 or 9' teeth making Season 1, explains Season 2 twist
- Gaston Glock, the Austrian developer of the Glock handgun, dies at 94
- More cold-case sexual assault charges for man accused of 2003 Philadelphia rape and slaying
- Trump ballot ban appealed to US Supreme Court by Colorado Republican Party
Recommendation
-
Multi-State Offshore Wind Pact Weakened After Connecticut Sits Out First Selection
-
Muslim girl, 15, pepper-sprayed in Brooklyn; NYPD hate crime task force investigating
-
New Mexico native will oversee the state’s $49B savings portfolio amid windfall from petroleum
-
State Rep. Denny Zent announces plans to retire after current term
-
Hurricane forecasters on alert: November storm could head for Florida
-
An Indiana dog spent 1,129 days in a shelter. He has his own place with DOGTV.
-
TSA stops a woman from bringing a loaded gun onto a Christmas Eve flight at Reagan National Airport
-
Emma Heming Shares Sweet Tribute to Husband Bruce Willis Celebrating 16 Years Together