Once you reach your 60s most people start to slow down. Retirement is almost upon you and it is time to enjoy the years you have left. Social Security is a payment that you receive from the Social Security Administration. Depending on when you claim, you will receive different amounts. Claiming early drops the amount that you will earn.
Will Your Benefits Be Taxable?
Social Security benefits are taxable if you earn more money elsewhere. It depends on how much you earn so make sure you don’t suddenly find yourself in a higher tax bracket from a side hustle. The tax rate on SSA benefits could be 0%, 50%, or 85% depending on your earnings.
What is the Difference between Claiming Early and Claiming Late?
You can file to receive Social Security retirement payments from the SSA when you reach 62. Be aware that if you claim as early as possible (age 62) your monthly benefit will be permanently reduced by around a third (30 percent).
Pros and Cons of claiming early
A pro is that if you need to top up the amount you receive monthly, you will get extra money every month. 12 payments annually between 62 and 67 (full retirement age) could add up to over $63,000!
A con to claiming earlier is that the amount you get is about $450 less per month. That’s a loss of $5,400 per year, not accounting for annual cost-of-living adjustments.
How do you Claim Benefits?
If you’re unsure how to claim benefits from the Social Security Administration, you can log onto the website and get all the information you need. “To claim benefits from the Social Security Administration you need to make sure that you have all of your documentation in order,” says Daniel Lerner, Executive Vice President of David Lerner Associates. “If you can avoid claiming benefits early, you’ll be getting more money when you had 67. You can add more to the amount you get every month on top of your retirement annuity and any other investments you may have.”
If you are between the ages of 62 and 67, you will be thinking about when to start claiming. No matter what age you decide to receive your Social Security benefits, make sure it’s the right choice for you. If you don’t want to file online, you also can visit a local SSA branch or call them at (800) 772-1213.
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