Keeping your Social Security facts straight is important to getting the most out of the benefits program that so many rely on in retirement.
A lot of factors go into determining how much you’ll receive every month from Social Security. Arguably two of the biggest aspects that determine your benefits are your 35 highest-earning years of employment and your predetermined full retirement age (FRA).
We’ve harped a lot on FRA in the past here on Money & Markets, but that’s only because there is so much power in knowing the facts about this aspect of Social Security. I would argue knowing your FRA and how it applies to your benefits is the most important thing to internalize as you prepare for retirement.
Your FRA is when you are eligible to claim your full benefit amount, and deciding what age you claim Social Security determines how much your monthly check will be cut or boosted in relation to your FRA. Here’s a handy chart that shows how much your monthly benefit will fluctuate depending on when you claim.
| START COLLECTING AT: | FULL RETIREMENT AGE OF 66 | FULL RETIREMENT AGE OF 67 |
| 62 | 75% | 70% |
| 63 | 80% | 75% |
| 64 | 86.7% | 80% |
| 65 | 93.3% | 86.7% |
| 66 | 100% | 93.3% |
| 67 | 108% | 100% |
| 68 | 116% | 108% |
| 69 | 124% | 116% |
| 70 | 132% | 124% |
Your monthly benefits actually get boosted 8% for every year you delay Social Security past your FRA, but this is where a lot of people get tripped up.
One Social Security Fact to Get Right
A Social Security fact that you may not know — which is incredibly important — is that your benefits will not continue to grow after age 70.
In fact, a survey from MassMutual conducted earlier this year showed 47% of people age 55 to 65 thought you could accrue delayed retirement credits beyond age 70. But if you were to do that, you’d risk missing out on a chunk of what you’re owed.
That wasn’t the only Social Security fact that stumped people in the MassMutual quiz. Of the 1,500 polled, only 48% managed to pass with a “C” grade or higher. Check out more on the Social Security facts quiz here.
Let’s get back to delayed retirement credits and why you shouldn’t wait much longer after your 70th birthday to apply for Social Security benefits.
Delayed retirement credits are essentially just bonuses you accrue starting at your FRA. If your monthly Social Security benefits are $1,500 (the national average in 2020), that amount could grow to $1,860 per month (a 24% increase) if your FRA is 67 and you start collecting at 70.
Since delayed retirement credits stop on your 70th birthday, it behooves you to start Social Security as soon as possible once you reach that age. The SSA will pay up to six months of retroactive benefits, though, so the latest possible age you should aim to claim is 70 1/2.
Starting any later than 70 1/2 means you will miss out on payments. Remember, you helped fund Social Security your entire working life, so you’re essentially giving away money if you delay benefits for too long.
Getting your Social Security facts straight can be a boon for your retirement planning, and learning as much as you can means you’ll get the most out of the program once you leave the workforce.
• You can find all of the latest and most important news about Social Security here on Money & Markets.
