
Social Security
Social Security Options and Their Requirements
Social Security offers more than just guaranteed income. You may be eligible to receive disability, spousal, survivor, and medical benefits.
The time at which you apply for Social Security matters. There are three key numbers to know when it comes to claiming Social Security that influence the benefit you receive:
Before we break down the pros and cons of collecting benefits at each age, let’s get the definition of Full Retirement Age straightened out. Full Retirement Age, as defined by the Social Security Administration (SSA), “is the age at which a person may first become entitled to full or unreduced retirement benefits.” That is to say, Full Retirement Age isn’t one specific number, it varies slightly depending on the year you were born. For the bulk of Baby Boomers, Full Retirement Age is about 66 years old.
Regardless of when you were born, the age you start collecting benefits as early as age 62, and as late as age 70. So, let’s talk strategy.
The minimum age to receive Social Security Retirement Benefits is 62. However, individuals who claim Social Security at Early Retirement Age pay dearly for taking their money early. Their retirement benefit can be reduced by as much as 25% relative to someone who waits until Full Retirement Age, according to the SSA. This reduction lasts for the duration of that individual’s life.
This steep reduction has led fewer Americans to claim early. Back in 1985, 57% of men and 62% of women claimed their Social Security benefits at Early Retirement Age. Fast forward to 2013, and those percentages have dropped to 36% and 40%, respectively.
Your Full Retirement Age is somewhere between ages 65 and 67 depending on when you were born. For the bulk of Baby Boomers, Full Retirement Age is about 66 years old. Retirees who wait until Full Retirement Age to claim Social Security are eligible to receive their full retirement benefit for the remainder of their lives. Bear in mind though — a full retirement benefit is not the highest possible retirement benefit. More below.
If you think you might have a long life in retirement – say you’re a non-smoker in good health – waiting to claim Social Security until age 70 may pay off. In the period between Full Retirement Age and 70 retirees collect what’s known as Delayed Retirement Credits – an increase to Social Security income for each month a retiree postpones a benefit claim. In all, the Delayed Retirement Credit can boost income by 8% for each year that an individual waits to claim Social Security after Full Retirement Age, up until age 70.
Optimizing your Social Security benefits is part of foundation laid to making sure you receive your monthly paycheck.
The old retirement adage says that we should use the three-legged stool approach to prepare for retirement:
According to the Social Security Administration, individuals aged 65 and over in the top quartile for income (an average of $78,180) received only 18% of their income from Social Security. So where does the remaining 82% come from?
Income annuities provide a guaranteed lifetime stream of income during your retirement. You pay a lump sum upfront to purchase your annuity from an insurance company. Then, the insurance company sends you a series of payments for the rest of your life.
At Blueprint Income, we offer annuities from more than 15 top rated insurance companies. Click below to get real-time personalized quotes.
From there, you’ll get access to our annuity guides and team of specialists to help you analyze your retirement finances and walk you through the application process.
Social Security offers more than just guaranteed income. You may be eligible to receive disability, spousal, survivor, and medical benefits.
Here’s what you need to know when applying for your Social Security benefits.
For most Americans, Social Security only accounts for a portion of their retirement income. Here’s how you can fill this gap to ensure you have enough income during your golden years.