January 23, 2022

Claiming Social Security at 70 Can Benefit You – Except in This 1 Scenario

Many seniors rely on Social Security as a major source of income. And chances are you will do the same. Therefore, you can be motivated to do everything you can to get the highest possible benefit.

The monthly benefit you are entitled to upon retirement depends on your personal income history. But the age at which you claim Social Security also determines what your monthly benefit looks like. You are entitled to your full monthly benefit based on your earnings on full retirement age, or FRA, which starts at 66, 67, or anywhere in between, depending on your year of birth.

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Meanwhile, you can sign up for social security from 62 years old, but if you claim benefits before FRA, they will be permanently reduced. You can also defer your filing after FRA, and for every year you do this, your benefits increase by 8%.

That incentive just happens to run out at age 70. But if your FRA is 67, it means you have a chance of getting a 24% increase in your benefit – for life.

It is for this reason that waiting until age 70 to claim Social Security is often a very good idea. But here’s a scenario where waiting that long definitely doesn’t pay off.

Be careful when claiming spousal maintenance

We just learned that Social Security benefits are based on individual earnings. However, even if you were never part of the workforce, you may be entitled to Social Security if you were married or are to someone who qualifies for benefits.

It is a concept known as spousal alimony, and it’s something that serves as a financial lifeline for many retirees. If you are entitled to partner benefits, you may be eligible for up to 50% of the benefits your spouse receives, provided you wait until FRA applies.

Suppose your spouse is entitled to $2,000 a month in Social Security. If you claim a partner benefit from your FRA, you will get $1,000 per month.

That said, delaying partner benefits beyond FRA is something you shouldn’t do. While it’s possible to grow a personal Social Security benefit by waiting to file, that option doesn’t apply to partner benefits. So if you’re considering claiming your partner’s benefits at age 70, it’s time to reconsider that idea, because waiting after FRA won’t make you any more money. If anything, maybe you would to lose money by waiting.

know the rules

Social security rules are tricky, and to be clear, there are many. But the more you read about how the program works, the easier it will be to avoid traps like the one above.

While applying for benefits at age 70 is a smart move in many cases, there are: situations outside a spousal maintenance claim where there is no point in waiting so long. So it’s important to arm yourself with as much information as possible to make the right decision.

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