I am always hearing from readers who are hung up on making sure they start their Social Security benefits at precisely their full retirement age. Or at precisely the age of 70. They don’t want those benefits a month before. They don’t want them a month after.
They want to make darn sure that their benefits start at exactly the month they chose as their Social Security starting date. And they almost seem to be losing sleep making sure this is going to happen. They send me emails asking me, almost begging me, to help them make sure they select the right date.
I always want to tell these guys (and it always seems to be guys) to chill out. Don’t worry. Be happy! You will probably pick the right date. But even if you don’t, guess what: The Earth will keep spinning and the sun will come up tomorrow. And you will not be making a huge mistake that will affect your benefits for the rest of your life. I will explain what I am talking about in a minute.
But first, let me go over the ground rules. They are really simple. If you want benefits to begin at your full retirement age (FRA), then on your Social Security retirement application, you simply indicate the month you reach your FRA as your starting month. So, if your full retirement age is 66 years and 8 months, and you will be that age in September 2024, then you simply indicate September as your starting month. That’s it!
But some people overthink this. For example, they know that Social Security checks come one month behind. In other words, the September Social Security check is paid in October. So, if a guy turns FRA in September, he thinks too hard and puts October as his starting month. But the Social Security application question isn’t asking you which month you want your check to show up in your bank account; it’s asking you which is the first month you want to be eligible for a Social Security check.
One little bit of clarification: Social Security eligibility always goes by month, not by days. For example, if you were born on Jan. 21, 1958—meaning your full retirement age is 66 and 8 months, and that’s when you want your benefits to begin—you don’t indicate Sept. 21, 2024, as your eligibility date. You simply indicate September 2024.
Some guys have told me that they are afraid to file for benefits early because they are worried sick they will get benefits before their full retirement age. For example, Bob and I recently exchanged several emails. He was born on Jan. 14, 1958. His full retirement age is 66 and 8 months. And he wants to make sure his benefits begin at his FRA, which would be September 2024. He asked me when he could file for benefits. I told him he could start the ball rolling next month, in July.
But he doesn’t want to do that because he’s worried they will use July as his starting date. I told him that assuming he indicates September as his starting date on the application, that is when his benefits will start. But he wrote back to say he was just so concerned about getting benefits on the wrong date that he was going to wait until September to apply.
I then sent him a return email with my “the sun will come out tomorrow” message. In other words, even in the extremely unlikely event that his benefit start date ends up being July, the world won’t end, and his benefits won’t be affected all that much.
Let’s say Bob’s September full retirement age benefit rate is $3,200. If through some fluke, his benefits started two months earlier, he‘d get a slightly reduced benefit. Benefits are reduced by about 0.5 percent for each month they are started early. That comes out to a 1 percent reduction for Bob. So instead of $3,200 per month, he’d get $32 less per month, or $3,168. That’s the downside. He‘d get $32 less each month. But on the upside, he’d get two extra Social Security checks at $3,168 each, or $6,336. Bob would have to live another 198 months, or more than 16 years, before he came out on the losing end of the Social Security stick with that slightly earlier starting date.
Bob was a bit relieved by that point I made. But then he told me he had another concern: his wife. She has a lower Social Security benefit on her own record, and assuming Bob dies first, she will get widow’s benefits on his record. And he said he wants her to get as much money as possible. So, if Bob ends up with $32 less per month in retirement benefits, then his wife’s widow’s benefit would be $32 less per month, too.
I told Bob that if making sure his wife gets the highest widow’s benefit possible was his primary concern, he should consider waiting until age 70 to file for Social Security. He would get almost four years’ worth of delayed retirement credits added to his benefit rate, and his wife would also get that extra money in the form of widow’s benefits. Bob told me he considered that, but he and his wife decided he should not give up all the benefits he'd get between now and age 70.
And here is a message for those who plan to wait until age 70 to file: Social Security claims filed after full retirement age come with an option of taking up to six months in retroactive benefits. So, let’s say you reach 70 in August 2024. When you file, you could say you want your benefits to start in August, or you could elect to take the six months in retroactive benefits. In other words, your Social Security start date would then be February 2024. If you like the idea of a big retroactive check, then go for it, but your ongoing benefit rate will be about 4 percent less.
