Money & Retirement

Social Security Filing Ages

fyi50+: The are many questions about at what age you should file for Social Security benefits. Most workers know you can start benefits as early as age 62 or delay starting benefits to as late as age 70. But what happens if you miss the age 70 cut-off?

I asked David Freitag to comment on Social Security filing ages and what happens if you miss the window.

David Freitag: Most workers file for their Social Security benefit between age 62 and their full retirement age. If you file before your full retirement age, the benefits are actuarily reduced for early filing. However, if you delay filing past your full retirement age, the benefits are increased by delayed retirement credits.

These delayed retirement credits are earned past full retirement age at the rate of a 2/3 of 1 percent increase per month. This works out to be 8% simple interest increases for each year past full retirement age. By delaying Social Security benefits past full retirement age, workers will see up to a 32% increase in their benefits, starting at age 70 for the rest of their lives. Delayed filing can be a good option for many people who are in good health and do not need access to the funds.

It is important for workers to understand that filing for Social Security past age 70 the opportunity to earn delayed retirement credits stops. Those 8% per year increases are no longer credited to the worker’s account. Many people do not understand that waiting past 70 does not increase their retirement check and either on purpose or by accident miss the deadline.

Here is a classic example of what happens when you miss the Social Security filing deadline.

Mary was confused about earning delayed retirement credits. Because she was still working, she did not need her $2,800 per month benefit to support her lifestyle. As a result, thinking her benefits would continue to increase, she did not file at 70. When she filed at age 71, she was surprised to learn the benefit for ages 71 and 70 were exactly the same amount. She missed the filing window and, as a result, lost $33,600.

The Social Security Administration knows that workers, for one reason or another, miss filing deadlines. That is why they have a special provision so workers, once past full retirement age, can ask for a six-month retroactive correction. Using this retroactive correction provision, you can turn the clock back six months and receive those lost benefit in a lump sum as a one-time payment. See ssa.gov for more information:

In our example, Mary should ask for a six-month retroactive refund. She would receive a payment of $16,800, but she has lost the other $16,800 because she missed the age 70 window. Still, the one-time lump sum payment helps offset her error.

Remember: The six-month Social Security filing lookback is only possible when a worker is past his or her full retirement age. Plus, when you use the six-month lookback, the monthly payments will all be based on the starting date as of six months ago.

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David Freitag

David Freitag, an industry veteran in financial services and wealth management, brings a deep passion and unparalleled knowledge of Social Security filing strategies and retirement income planning to his current role as a financial planning consultant for the Advanced Concepts Design Group of Massachusetts Mutual Life Insurance Company (MassMutual). His also holds a Master of Education and Bachelor of Science degrees from the University of Maryland.

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