When To Apply For Social Security Benefits

We’ve covered the concept of the benefit to you in delaying your Social Security application in another article, but did you realize that even delaying a few months can have a significant impact on your benefit?  This is the case for all benefits, whether taking them before FRA or after – as your age is always calculated by the month, with increase or reduction factors applied for each month of delay or early application, respectively.

Early Application Factors

For each month prior to your Full Retirement Age (FRA), a reduction factor is applied.  For the 36 months just prior to your FRA, your benefit is reduced by 5/9 of 1% – so applying a full 36 months prior to FRA will result in a reduction of 20% (5/9% * 36 = 20%).  Any months prior to that 36 will result in a 5/12 of 1% reduction, which means that applying an additional year earlier will result in 5% more reduction, added to the 20%.

So, for each month after age 62 that you delay applying for benefits, you’ll increase the amount that you actually receive – delaying to age 63 will garner 5% more than applying at age 62.  If your FRA is 66, delaying to age 64 will pick up an additional 6.66%, as will delaying each additional year up to FRA.  But the key is that even a few months’ delay can increase your benefit – permanently.

Delayed Application Factors

When you delay applying for benefits past your FRA, you receive an increase in your benefit as well.  This increase is (generally) better than the increase (or rather, lack of decrease) that you achieve by delaying application after your early retirement age.  For each month that you delay applying for benefits beyond FRA your benefit will increase by 2/3 of 1%, for a total increase each year of 8% (a little less for folks born prior to 1943).

So – make every month count!  If you can delay even by a few months, it can make a long-lasting difference in your lifetime benefits – and potentially for your spouse as well, if he or she survives you.

It should be noted that delaying only helps up to age 70.  At that point your increase factors have maximized, and no further factors will be applied.  Of course, if you’re still working and earning fat cash, your benefit could possibly continue to increase beyond your age 70, but that’s a topic for another time…

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

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