Your Complete Guide to a Successful & Secure Retirement by Larry Swedroe & Kevin Grogan

Author:Larry Swedroe & Kevin Grogan
Language: eng
Format: azw3, epub, mobi
Publisher: Harriman House
Published: 2019-01-06T16:00:00+00:00

1943–1954

66

1955

66 and 2 months

1956

66 and 4 months

1957

66 and 6 months

1958

66 and 8 months

1959

66 and 10 months

1960 and later

67

You can file for retirement benefits as early as age 62. However, there are significant reasons to wait. By filing early, your benefits are substantially — and permanently — reduced. For example, if your FRA is 66 and you start to receive retirement benefits at age 62, the benefit you receive is reduced to 75 percent; if you are the spouse, your spousal benefit is reduced from 50 to 35 percent. (The SSA provides a table showing the impact of taking benefits early at their website www.ssa.gov/oact/quickcalc/earlyretire.html. More detail on spousal and other couples’ benefits later in the chapter.)

It is also important to understand the concept of “deeming.” In most cases, if you are eligible for retirement and spousal benefits and file for either one prior to reaching FRA, you are “deemed,” or required, to file for the other as well. When you file for both, you effectively end up receiving the higher of the two benefits. More on spousal benefits later in the chapter, as well as exceptions to the deeming rule in the section titled “A Closed Loophole and a Limited Opportunity” (see page 134).

Another reason not to take benefits early is that you could be subject to the earnings test — if you file prior to your FRA, Social Security will deduct $1 for every $2 of benefits of income you earn that is over a specific amount ($17,040 in 2018). If you reach FRA in 2018, Social Security will deduct $1 in benefits for every $3 you earn above $45,360 up to FRA. Importantly, earnings are only counted prior to the month you reach your FRA. Thus, if your birthday is early in the year, or you do not have substantial earnings the year you reach FRA, you may not be impacted. And starting in or after the month you reach FRA, there is no such limit — you can earn any amount of salary and still receive full benefits.

Taking benefits early can also impact survivor benefits. If you are single and encounter an illness that reduces your life expectancy, it may make sense to file as soon as possible. However, for married couples, when one dies, only the higher benefit amount remains for the surviving spouse. Thus, if you are the higher earner, but take your benefits early, that not only means a reduced retirement benefit during your lifetime, but a reduced survivor benefit if you have a spouse who outlives you. The bottom line is that if you are the higher wage earner of a married couple you must consider that you are not just filing for yourself. Instead, you are filing for the couple’s joint lifetime.

After reaching FRA, you can receive “delayed retirement credits”

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