A NEW Social Security update in May could mean more money in the pockets of millions of Americans.
This allows the most benefits for those at a crucial age.
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It’s fairly common knowledge that the longer seniors wait to take retirement benefits from the Social Security Administration (SSA), the more cash is in their monthly checks.
Financial experts often recommend that Americans, depending on their situation, wait to obtain Social Security until their full retirement age (FRA).
While it’s allowed to start taking the money at 62, that isn’t considered the FRA, and those who got it so immediately wouldn’t get 100% of their possible benefits.
But what determines the FRA for 100% of benefits?
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It was firmly 65 for several years before Congress made adjustments in 1983.
That then raised it in phases to account for potentially longer life expectancies.
Since then, the FRA has slowly increased by two months every so often, depending on a senior’s birth year and month.
For example, anyone born between 1955 and 1959, FRA is between 66 and 67.
Those born in 1957 reached their FRA when they were 66 years and six months old, which began in 2023.
Being born only a year later in 1958 would mean turning 66 years and eight months old would qualify for the FRA, which started in September 2024, per CBS News.
For those born in 1959, the FRA has now increased to 66 years and 10 months old as of May.
That means individuals born that year can get FRA benefits between March 2025 and January 2026.
It’s best to use the
Exactly when that’s reached will depend on their birth month.
HOW TO SUPPLEMENT YOUR SOCIAL SECURITY
Here’s how to supplement your Social Security:
Given the uncertainty surrounding Social Security’s long-term future, it’s essential for workers to consider ways to supplement their retirement income.
Senior Citizens League executive director, Shannon Benton recommends starting early with savings and investing in retirement accounts like 401(k)s or IRAs.
- 401(k) Plans
- A 401(k) is a retirement account offered through employers, where contributions are tax-deferred.
- Many employers also match employee contributions, typically between 2% and 4% of salary, making it a valuable tool for building retirement savings.
- Maxing out your 401(k) contributions, especially if your employer offers a match, should be a priority.
- IRAs
- An Individual Retirement Account (IRA) offers another avenue for retirement savings.
- Unlike a 401(k), an IRA isn’t tied to your employer, giving you more flexibility in your investment choices.
- Contributions to traditional IRAs are tax-deductible, and the funds grow tax-free until they are withdrawn, at which point they are taxed as income.
Anyone born in 1960 or later must be 67 to get the FRA.
The average FRA amount is currently around $4,018, but it varies on a case-by-case basis.
Those born in 1959 are much better off waiting for their FRA if they can this year.
Had they obtained it at 62 and not waited, benefits could’ve been reduced by as much as 29.17%, per Pinecrest Lake.
WAITING GAME
Even FRA isn’t the best time to take Social Security benefits for those who want the most money possible.
Thanks to “delayed retirement credits” from the SSA, if an American decides to continue waiting to take benefits, amounts will still increase until 70, when it’s maxed out.
Gal Wettstein, senior research economist at the Center for Retirement Research at Boston College, said 70 is typically the best age to take Social Security benefits based on the data for relatively healthy adults.
“I’m not in the advice-giving business, but I can say things about averages,” Wettstein told USA Today.
“When you just look at averages, you’re better off postponing claiming until as late as possible, until 70.”
WHY SO IMMEDIATE?
Still, a study from Bankrate found that most Americans take their benefits right when they can at 62, much less FRA or 70.
Robert Brokamp, senior adviser at The Motley Fool, and Monique Morrissey, senior economist at the Economic Policy Institute, noted two crucial reasons for this move.
Americans who took the benefits right away either didn’t expect to live very long or desperately needed the cash.
“Many people don’t have enough savings,” Morrissey told the publication.
“And it also makes people nervous to draw down their savings, even if it’s the right thing to do.”
Not to mention, SSA funds are still expected to run out soon, with predictions of retirees only getting 83% of them by 2035 unless changes are made, per CNBC.
About one million Americans also haven’t gotten their “Fairness” increase for Social Security as of this month.
Seniors are also facing lengthy delays on applications, with a woman recently being told she’d have to wait 230 days for a review.