Millions of Baby Boomers Are Running Out of Time on Social Security Decisions

Today’s oldest baby boomers are pushing 80. But many baby boomers are still in their early 60s, which means they may still be working and not making plans to retire just yet.

But in the coming years, millions of baby boomers will have some tough choices to make in the context of Social Security. And it’s important to have all of the right information before making a potentially harmful decision.

Why boomers need to claim Social Security cautiously

Social Security benefits are based on workers’ lifetime earnings. Specifically, the Social Security Administration takes workers’ 35 most profitable years of wages into account when calculating their retirement benefits. In that formula, earlier wages are adjusted for inflation.

But the filing age boomers choose for claiming Social Security also helps determine how much money they receive each month.

The earliest possible filing age is 62. Full retirement age (FRA), meanwhile, is when recipients can collect their Social Security checks each month without a reduction.

For younger boomers, FRA is 67. There’s also the option to delay Social Security past FRA for boosted checks, up until age 70.

As many of the youngest baby boomers today become eligible for Social Security, they’re going to have to decide when to sign up for those monthly benefits. And it’s important to look at that decision from all angles.

Questions to ask yourself before claiming Social Security

If you’re a baby boomer who’s not yet on Social Security but is about to become eligible, it’s important to sign up at the right time.

Filing ahead of FRA will reduce your benefits monthly, but not necessarily in on a lifetime basis. And that reduction might make sense if it allows you to get your money sooner and achieve other goals.

On the other hand, Social Security may be your only guaranteed retirement income stream for life. The later you claim benefits, up until 70, the more peace of mind you might get.

If you’re not sure whether you should claim Social Security early, late, or on time, ask yourself these questions:

• Am I still working? If you’re collecting a paycheck from a job, it could pay to wait until at least FRA, especially since you may risk having benefits withheld for earning too much.
• Do I have a nice amount of savings? With a more robust nest egg, you can potentially manage with smaller Social Security checks, and that allows you to get your money sooner. With little savings, a delayed claim can make sense.
• Am I in good health? Poor health should have you considering an early claim. Great health and a family history of longevity should have you contemplating a delayed filing.
• Do I have a spouse to take care of? The amount of money you receive from Social Security impacts spousal and survivor benefits. Think about how the timing of your claim will have an effect on your spouse’s retirement income.

All told, deciding when to sign up for Social Security is not easy. It’s important to weigh the pros and cons of filing at different ages.

It’s also crucial to run the numbers and see what benefit you’re entitled to at different ages. That information, combined with your estimated retirement income needs, could help you arrive at a filing age that makes the most sense.

Either way, it’s important to leave yourself with ample time to make a decision on Social Security. If you’ll soon be 62, start thinking through your options immediately so you don’t have to rush this crucial choice.