1 Social security change you need to know if you turn 62 in 2021

Social Security plays a major role in the retirement finances of tens of millions of Americans. About 90% of people 65 and over already receive benefits under the program, and for 50% of married couples and 70% of single retirees, these checks provide at least half of their retirement income.

Americans are eligible to begin claiming benefits as soon as they turn 62. But if your 62nd birthday is coming in 2021, there is one important change you need to know before you file for Social Security.

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How your age will affect the amount of your Social Security benefits

First, a bit of contextualization. The age at which you apply for benefits has a direct impact on the amount of your monthly checks. To receive the full amount of benefits to which you are entitled, you must apply for what the government refers to as your Full Retirement Age (FRA).

For those who turned 62 last year, the FRA was 66 years and 8 months. However, the FRA increases by 2 months this year – like every year since 2017. So if your 62nd birthday is in 2021, you will have an FRA of 66 years and 10 months.

Obviously, this means that in order to receive your full benefit, you will have to wait a few more months before you start claiming. But more than 6 in 10 older people don’t wait that long, and if you apply for Social Security early, the increase in FRA means your benefit cuts will be bigger.

Consider this: Someone with a 66-year-8-month FRA who chooses to claim benefits at 62 would see their check amount reduced by 28.3%. If you have an FRA of 66 years and 10 months, however, and apply at 62, your benefits will be reduced by 29.2%. It might not seem like a big difference, but it could potentially add up to a few hundred dollars a year.

Strategies That Can Increase Your Benefits

You have no control over your FRA because it is based on the year you were born. However, you can take steps to increase the amount of Social Security benefits you receive each month.

One option is to wait a little longer to apply for social security. If you don’t make a claim until you reach your FRA, you’ll make sure you get your full benefit amount, but waiting past that age will increase your check size even further. If you have a 66 year and 10 month FRA and wait until age 70 to apply, you will receive 125.3% of your total benefit amount. This could cost hundreds of dollars more per month than what you would get if you claimed at or before your FRA.

Also, if you want to receive as much from Social Security as possible, make sure you have worked for at least 35 years before you start receiving benefits. The Social Security Administration uses the top 35 earning years of your career when it performs the calculation on which your benefits are based. If you’ve earned paychecks in fewer years than that, the government will build zeros into those calculations, which will reduce the size of your monthly checks.

Tens of millions of retirees depend on Social Security to make ends meet. If you expect your benefits to be a major source of income in retirement, it pays to do your homework before you start claiming them. Making sure you know your FRA and how it will affect your benefits is just one way to make sure you prepare as much as possible for your later years.