Making matters worse is the new U.S. Bureau of Labor Statistics report that revealed that the consUS Eumer price index (CPI) marched higher by 7 percent—the fastest increase seen since the summer of 1982—further eating away at seniors’ Social Security benefits.
Moreover, for this particular year, know that there should be some special planning involved if one will be celebrating his or her sixty-sixth birthday in 2022. According to personal finance expert Christy Bieber at The Motley Fool, “a change to the rules is occurring that you must understand before you claim your benefits.”
“That’s because it can affect the amount of income you get each month for the rest of your life,” she continues.
This rule change is related to the full retirement age (FRA)—and for those celebrating their sixty-sixth birthdays this year, the FRA is slated to be sixty-six and four months, which is now two months later than for seniors who turned the same age last year.
Social Security Penalties Could Kick In
Here’s why that’s important to keep in mind. “You receive your standard benefit if you retire at exactly full retirement age. Your standard benefit is your primary insurance amount calculated based on how much you earned during your career,” Bieber writes.
However, “you are hit with early filing penalties for any month you get a Social Security check prior to FRA. So if you get benefits one month early, you face one month’s worth of early filing penalties. These reduce your monthly check amount, leaving you with smaller benefits each month for the rest of your life,” she adds.
But on the flipside, retirees can “earn delayed retirement credits for any month you put off the start of your Social Security benefits. These credits raise your payment, giving you more money each month for the rest of your life. This all means your FRA plays a crucial role in the amount of money Social Security provides to you,” she continues.
Pays to Wait Even Longer for Social Security
For those who have the financial resources to wait as long as possible to collect Social Security, they are in line to receive an even bigger boost to their monthly checks.
“If you’re healthy and have other resources to live off, it pays to wait. Your monthly payment will be 76 percent higher if you wait to start benefits at seventy rather than sixty-two, the earliest possible age,” AARP writes.
“If your full retirement age is sixty-seven and you claim Social Security at sixty-two, your monthly benefit will be reduced by 30 percent—permanently. File at sixty-five and you lose 13.33 percent,” it adds.
Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.