By Casey Dowd
For the millions of Baby Boomers not yet in retirement age the big question remains, when should I start taking my Social Security benefits?
According to the latest Fidelity Investments Social Security IQ Survey, today’s pre-retirees (ages 55-61) are far less inclined to begin taking Social Security benefits at 62, the first year Americans become eligible to apply — a marked contrast to when the survey was last conducted in 2008.
“Deciding when to start taking your Social Security benefits is one of the most important retirement planning decisions we face,” said Ken Hevert, senior vice president of Retirement at Fidelity Investments. “This decision can be challenging and may be dependent upon several factors, including one’s financial situation, health and lifestyle considerations and the needs of your immediate family. However, with some basic guidance and a sound retirement plan in place, it’s much easier to make an informed decision and get the most out of your benefits.”
Hevert discussed with Fox Business what you need to know as you approach retirement age.
Boomer: If I claim my Social Security benefits at age 62, will my benefits increase to my corresponding age as I get older?
Hevert: There aren’t any do-overs when it comes to Social Security, unless you’re willing to voluntarily stop your benefits — despite the fact that 38 percent of pre-retirees thought it was possible to change their Social Security claiming strategy throughout retirement. Once you’ve claimed your benefits at age 62, there generally won’t be any income “bumping” and your payments will not increase to the full retirement age benefits. So before you rush to collect your Social Security paychecks, make sure your collection strategy aligns with your retirement game plan.
Boomer: Do I need to give advanced notice of when I want to start collecting?
Hevert: Yes! One in 10 pre-retirees believes the Social Security Administration will give you a friendly nudge once you qualify for your benefits. But, in fact, it’s up to you to opt into Social Security… no earlier than four months in advance of when you want to receive your first benefit (or three months in advance if you want your first benefit at 62). Sixty-five percent did not know that you need to apply early for Social Security, leading to potential income gaps if you have a retirement date set up before the checks from Uncle Sam start rolling in.
Boomer: What is my FRA and can I continue working and still collect my SS?
Hevert: Your FRA — or Full Retirement Age — denotes the age at which you can claim your primary Social Security retirement benefit. It’s determined by the Social Security Administration based on the year you were born. Collecting your benefit before or after would result in a modified benefit amount. But here comes the tricky part—if you claim benefits before your FRA and continue to work, the money you earn over a certain amount each year may reduce your Social Security benefits until you reach your FRA. On the other hand, if you decide to hold off on collecting your benefits until you’ve reached your FRA, your Social Security benefits will not be reduced by your work income.
Boomer: Do I have to worry about my ex impacting my benefits?
Hevert: What’s mine is yours holds true here… even after a divorce. If you were married for 10 consecutive years and haven’t remarried yet — you are entitled to either your own benefits or 50 percent of the former spouse’s, whichever is higher — once you’ve reached your FRA. The good news? There’s no need to discuss this with an ex-spouse because your claim will not affect your ex’s benefits in any way — although half of pre-retirees thought otherwise.