Millions of seniors today receive a monthly benefit from Social Security. And once your career comes to an end, you might begin to rely pretty heavily on those benefits for income.
As such, if you’re getting close to retirement, it’s important to have a good understanding of how Social Security works. But in a recent MassMutual survey, 41% of respondents age 55 to 65 got an “F” on a Social Security quiz containing basic questions about the program.
If you’re someone who couldn’t pass a pretty basic Social Security quiz yourself, then it’s definitely important to read up on how the program works. Here are some key things to know.
Image source: Getty Images.
1. You need to be at least 62 years old to get benefits
The earliest age you can sign up for Social Security is 62. But you should know that filing at that age will result in a substantial reduction in your monthly benefits — for life. If you don’t have a lot of savings going into retirement, you might want to plan to file at a later age.
2. You can collect your full monthly benefit at full retirement age
Full retirement age, or FRA, is when you’re entitled to your complete monthly Social Security benefit based on your personal income history. That age hinges on your year of birth, and it’s either 66, 67, or somewhere in between.
In the aforementioned survey, many respondents thought that FRA was 65, regardless of their year of birth. Age 65 is when Medicare eligibility begins for everyone. But claiming Social Security at 65 will mean locking in a reduced monthly benefit for all of your retirement.
3. You can grow your benefits by delaying your filing
You don’t have to sign up for Social Security once FRA arrives. For each year you wait, your monthly benefits get a permanent 8% boost. However, that incentive runs out at age 70. So while there’s technically no such thing as a final age to claim Social Security, you’ll often hear that 70 is the “latest age” to sign up because there’s no financial upside to waiting any longer.
4. Spouses can receive benefits based on their partners’ earnings records
Your individual wage history helps dictate what monthly Social Security benefit you get. But if you never worked, you might still be eligible via spousal benefits. Those benefits could equal up to 50% of the benefit your spouse receives.
And it’s not just married people who are eligible for Social Security spousal benefits. You might also be entitled to spousal benefits as a divorcee. If you’re married, though, you’ll need to wait until your spouse files for Social Security to get spousal benefits of your own.
You also can’t collect more than one benefit from Social Security at the same time. So if you’re getting a benefit based on your own earnings history, you can’t also receive a spousal benefit. You’ll only get the higher of the two.
These are just some of the many rules associated with Social Security. If you’re nearing retirement, it pays to read up on the program so you know what to expect. It’s also really important to know the ins and outs so you can land on a filing age that’s right for you.