What you need to know about Social Security | Financial Buzz

What you need to know about Social Security

More than 65 percent of seniors depend on Social Security Administration for their financial stability. This provides a minimum of 50 percent of the total monthly income. As the financial health of retirees depend on this income, the decision to accept Social Security benefits at a particular age becomes a crucial financial decision. If you enroll too early, you may suffer reduced payment for reminder of life. If you wait too long, there could be a chance that you may be compelled to be reliant on other income avenues. The worst part is that you may have to continue working.

Comprehending the age of retirement

You should understand how the FRA or full retirement age, impacts benefits. The FRA of any individual is that particular age when it is deemed by Social Security Administration or the SSA that you will receive 100 percent of the retirement benefit. These are actually fluid and dependent on the birth year of a person.

The FRA thus effectively is a pendulum which determines whether you will receive less than 100 percent of the primary insurance amount when you retire, or amounts more than 100 percent. You can turn on the benefits tap as soon as you reach 62 years of age. For every year you defer to enroll, the benefits increased by about eight percent. There is also an incremental increase in the payout every month. It follows that waiting for a few months can boost the amount you have received. It follows that, depending on personal FRA, quickly starting benefits will lead to about 30 percent reduction from the total benefit you are supposed to receive at a full retirement age. On the flip side, if you wait until 70 years of age, the point where benefits of Social Security stops to accrue, it could lead anywhere between 24 percent and 32 percent in the extra payments on top of the benefits at your complete retirement age.

Time to start benefits

Take into account a few factors before you apply for benefits. First determine how healthy you are. In case you suffer from chronic health problems, file for all benefits before you reach the FRA. Wait for benefits if you are healthy. The inflection point of taking the decision is when you are 78 years of age. Wait until your FRA only if you believe that you will cross 78 years in your lifetime.

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