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When Should I Apply for Retirement Benefits?

Planning for your retirement takes a lot of careful consideration if you want to live comfortably. One way you can prepare is to look at what retirement benefits you may be eligible for - and when - through Social Security.

What is Social Security?

The Social Security program is a federally backed insurance program designed to provide benefits to:

  • People who are disabled
  • Survivors and other beneficiaries of workers who've passed away
  • Senior citizens who are aged 62 and older

Social Security Taxes

Most people are aware of the Social Security taxes that get deducted from every paycheck. Those are the taxes you have been paying for your entire working life - along with the ones you will continue to pay until you retire. These taxes are the source of the payments for anyone receiving Social Security benefits.

How much you are eligible for is determined by the Social Security system credits you earn throughout your work history.

Applying for Retirement Benefits

Regardless of what age you plan to begin receiving retirement benefit payments, you should know that your first payment should arrive about three months after you file.

You can file for your Social Security benefits by phone or online. As part of the filing process, you will likely require you to go to your closest Social Security office a few times. 

Applying "Early"

When you apply for your retirement benefits plays into how much you collect. If you sign up at the minimum age of 62, you won't receive as much as you would if you held out until age 70.

How does this break down?

The Social Security program allows you to begin collecting payments as early as age 62 in most cases. Those who choose to start receiving Social Security retirement payments at 62 will get 25 percent less for the life of their monthly payments than if they were to wait until full retirement age.

Of course, whether you can wait to claim your social security benefits will depend entirely on your unique financial situation. If it's financially possible, you could maximize your retirement benefits by beginning to collect retirement payments later rather than sooner.

Widower Exception

Social Security requirements mean that most retiring seniors can't claim their benefits until they turn 62. The program offers an exception for widowers and widows, however. When necessary, widowers and widows may begin collecting retirement benefits at age 60.

Full Retirement Age

Full retirement age will vary depending on the year during which you were born. Generally speaking, full retirement age will be either 66 or 67 for senior citizens leaving the workforce.

One benefit of beginning Social Security retirement payments at 66 is your benefit payments are not reduced. But waiting beyond your full retirement age, up to age 70, may provide you with even more significant financial benefits.

Maximizing Retirement Benefits

Let's say you are eligible for a monthly Social Security payment of $1,000 per month. The amount you end up receiving, however, depends on when you begin your retirement benefits.

But how would your payments be affected?

If your base retirement benefit is $1,000 at full retirement age, but you opt to begin claiming benefits at age 62, your monthly payment would go down to $750 for life.

If you chose to wait until you turn 70, you would receive an eight percent increase for every year you delayed after reaching full retirement age for the life of your payments.

Your Benefit Payments

How does the Social Security office determine your monthly benefit payment amount?

Generally speaking, they will average your highest 35 years, adjusting for inflation. Of course, the actual amount you end up receiving every month once payments begin will depend on when you apply and how long you worked.

Necessary Documents

You're going to need quite a few documents on hand, no matter how you choose to file for your benefit payments. These documents include, but are not limited to:

  • Your original birth certificate
  • W-2 or self-employment tax documents
  • Military service paperwork
  • Naturalization or citizenship documents
  • Social Security statement

As part of the application process, you also will need to provide your:

  • Date of birth
  • Place of birth
  • Employer's name and address
  • Bank account routing number for direct deposit
  • Social Security number

You also will be asked to provide information on former or current spouses during the filing process.

Not Ready to Retire?

What if you are ready to begin collecting on your benefits but are not yet ready to retire from the workforce?

The good news is that you do not have to wait for retirement to begin collecting payments as long as you have reached the minimum age of 62. Of course, the longer you wait to receive retirement benefits, the higher your monthly payment amount will be.

Work With a Professional

No matter when you choose to begin collecting your Social Security retirement benefits, you may want to consider contacting an experienced retirement attorney. You may also choose to work with a financial planner.

Planning for retirement can be complicated, and working with an attorney or financial planner may help you address your needs while you prepare for your future.