Unless you have millions of dollars saved up in a retirement fund, one of the most important decisions you’ll make as a senior is when to apply for Social Security benefits. Most financial advisors recommend waiting as long as possible to ensure a higher monthly payment. You can claim Social Security as early as age 62, but you won’t get the full amount owed until you reach full retirement age. After that, your benefit will jump by 8% for each year you wait to file.
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But like all rules, the one about waiting to collect Social Security doesn’t apply to everyone. Your decision on when to file for benefits depends on a variety of factors, ranging from your health and financial status to whether you plan to keep working. That holds true every year — including in 2024, when Social Security recipients will get a 3.2% cost-of-living adjustment on top of this year’s historically high 8.7% COLA.
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Here’s a look at five financial reasons you should claim your Social Security benefits in 2024 if you qualify for them.
You Need the Money Immediately
Sometimes financial circumstances dictate when you should file for Social Security benefits, which means it might make sense to claim them early rather than late. If you enter 2024 with health problems, mounting debt or a shorter-than-average life expectancy — or you simply have a hard time paying the bills — you should go ahead and claim benefits. This is especially true if you can no longer work and earn income. Using your benefits to pay down debt or take care of a needed medical procedure can help you save money further down the road.
You Reached Full Retirement Age
The full retirement age in 2024 is either 66 or 67, depending on when you were born. For those born in 1960 and later, the FRA is 67. If you hit full retirement age in 2024 it might make sense to collect Social Security because you will get the full benefits you are entitled to based on your work experience and the taxes you paid into the system. This could be a smart strategy if you are still working because when you reach full retirement age, your benefits are no longer reduced when you earn outside income.
You Turned 70
If you turn 70 in 2024, there’s no longer a financial incentive to wait to claim your benefits. Once you hit 70 years old, you max out your benefits and get the biggest possible monthly payment. As of December 2022, the average Social Security benefit at age 70 was $1,963.48 a month, according to Social Security Administration data reported by The Motley Fool. That compares to $1,274.87 at age 62, $1,504.98 at age 65 and $1,844.83 at age 67.
You Claim Spousal Benefits
One thing to keep in mind about Social Security spousal benefits is that there’s no financial incentive to waiting until age 70. The payout for spouses is capped at 50% of the primary beneficiary’s full retirement benefit. For example, suppose you were slated to receive $2,000 per month at age 67. Even if your spouse waited until age 70 to collect a $2,640 monthly payout — the normal boost for recipients — your maximum benefit would remain at 50% of $2,000, or $1,000 per month. In this case you should go ahead and claim benefits in 2024.
You Have Plenty of Retirement Savings
Building up a large nest egg gives you a lot of flexibility when it comes to collecting Social Security. On the one hand, you can probably afford to wait because you don’t need the Social Security income. On the other hand, because you don’t need the income, you might decide to go ahead and collect Social Security so you can put the money immediately to work. This might come in the form of investing your check in assets that can give you a higher return than you would get by waiting longer to claim benefits.
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This article originally appeared on GOBankingRates.com: 5 Great Financial Reasons To Claim Your Social Security Benefits in 2024
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