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Myth #1: You Must Claim Social Security at Age 62
While 62 is the earliest age to claim Social Security, it's not the only option. Your Full Retirement Age (FRA) is determined by your birthdate and affects your base benefit. Claiming before your FRA results in a permanent reduction in monthly income. For those born after 1960 with an FRA of 67, claiming at 62 reduces benefits by 30%.SourceMoneyGuru-https://www.mgkx.com/5138.html
Waiting to claim comes with a bonus. Delaying until age 70 increases benefits by roughly 8% per year, up to 24% if your FRA is 67. The increase can be as high as 77% compared to claiming at 62. Considering longer retirements, delaying claiming could significantly boost your income.SourceMoneyGuru-https://www.mgkx.com/5138.html
Myth #2: You’ll Never Get Back What You Put In
Social Security isn't just a return of contributions; it's an inflation-protected income stream. While the SSA doesn't offer a break-even calculator, it provides lifetime income, ensuring you won't outlive savings. Even if you live past 100, you'll receive monthly benefits, with survivor benefits for your spouse. It's a safety net that can provide more than your contributions over time.SourceMoneyGuru-https://www.mgkx.com/5138.html
Myth #3: Ex-Spouse’s Actions Affect Your Benefit
If married for 10 years and not remarried, you may be entitled to spousal benefits based on your ex-spouse's earnings. Claiming on their benefit doesn't affect their benefit or require their involvement. This benefit could be larger than your own, offering a valuable strategy for maximizing your income.SourceMoneyGuru-https://www.mgkx.com/5138.html
Myth #4: Benefits Based Only on Pre-65 Earnings
Your benefit is calculated based on the highest 35 years of earnings, which can include years after age 65. Working part-time or past 65 contributes to your benefit if earnings are high enough. You need 10 years of covered employment (40 credits) to be eligible for Social Security. Even with fewer than 35 years, your benefit won't be zero; zeros are factored into the calculation.SourceMoneyGuru-https://www.mgkx.com/5138.html
Myth #5: Claiming Early Can Be Bumped Up at FRA
There's no automatic income increase at FRA if you claim early. However, you can voluntarily suspend benefits after FRA, leading to an 8% per year increase until age 70. After that, you receive cost-of-living adjustments, but your base benefit won't increase. Cancelling a claim within the first 12 months allows you to repay and later claim at a higher rate, but this can only be done once in your lifetime.SourceMoneyGuru-https://www.mgkx.com/5138.html
Start Planning Early
Social Security is a cornerstone of retirement income. Benefits are lasting and inflation-protected, making them crucial for a stable retirement. Work with a financial advisor to explore claiming strategies aligned with your financial goals.SourceMoneyGuru-https://www.mgkx.com/5138.html
Remember, accurate information is essential for making the right decisions. By dispelling these myths and understanding the true workings of Social Security, you can secure a more comfortable retirement.SourceMoneyGuru-https://www.mgkx.com/5138.html SourceMoneyGuru-https://www.mgkx.com/5138.html
