Will your Social Security benefit increase when you reach full retirement age? | Personal finance

(Kailey Hagen)

Social Security is the cornerstone of most Americans’ retirement plans, but many people still don’t know how it works. A potentially dangerous misconception is that your Social Security checks increase once you reach full retirement age (FRA).

This can happen to some people, but it’s not something any senior should expect. Here is an overview of the checks that could be increased over time and why.

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What is your full retirement age, anyway?

Before diving into all of this, you need a basic understanding of Full Retirement Age (FRA) and how it affects your cheques. The government assigns everyone a full retirement age based on their year of birth. Here is a table that can help you find yours:

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year of birth

Full retirement age

1943 to 1954

66

1955

66 and 2 months

1956

66 and 4 months

1957

66 and 6 months

1958

66 and 8 months

1959

66 and 10 months

1960 and after

67

Data source: Social Security Administration.

You must wait until this age to register if you want to receive the full Social Security benefits you have earned based on your work history. You can start earlier, but each month you claim benefits below your FRA reduces your checks. Those who start immediately at age 62 receive only 70% of their full benefit by check if their FRA is 67 or 75% if their FRA is 66.

Each month you delay benefits, your checks increase by 5/12 of 1% to 2/3 of 1% until you reach your maximum benefit at 70. That’s 124% of your total benefit per check if your FRA is 67 or 132%. if your FRA is 66.

Who benefits from a boost at full retirement age?

Technically, everyone will most likely see their checks increase in the year they reach their FRA. Benefits will increase every two years due to cost of living adjustments (COLA). These are annual adjustments made by the Social Security administration to help the purchasing power of Social Security keep up with inflation. But even if you technically get more, that money probably won’t go further than your little checks from years past.

Some people see noticeable increases in their benefit checks once they hit their FRA, and that’s because they’ve already had money withheld due to the Social Security earnings test. This only applies to those applying for Social Security while still working and under their FRA.

Those under their FRA for all of 2022 lose $1 from their Social Security checks for every $2 they earn over $19,560 due to the earnings test. And those who reach their FRA this year will lose $1 for every $3 they earn over $51,960 if they reach that amount before their birthday. But the Social Security Administration doesn’t keep that money forever.

When you reach your FRA, the government recalculates your benefit and gives your checks a little boost to make up for the money it was previously withholding from you. The extra amount you will get depends on several factors, including how much you have withheld in previous years.

But if the Social Security Administration has never withheld money from you, you shouldn’t expect a boost to your FRA. You will continue to receive the same size checks as before with small annual COLAs.

So how do you get more Social Security?

If your goal is to get the most out of Social Security as a whole, you need to choose your starting age carefully. For those with short life expectancies, early treatment usually results in the greatest lifetime benefit. If these people delay, there is a risk that they will lose their benefits completely.

Those planning to live to age 80 or more should consider delaying their benefits if they can afford it. This means they will receive fewer years of checks, but over several decades the higher benefit amount may result in a higher lifetime total.

If you can’t afford to delay benefits or choose not to, that’s okay. Remember that you probably won’t get any extra money from your FRA. So make sure you have enough personal savings on hand to cover what Social Security doesn’t.

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