If you're looking forward to retiring in 2024, chances are good you're probably counting the days until you can claim your Social Security benefits. But before you move forward with your request for the Social Security Administration to start sending you money, you'll want to take a moment to make sure you're actually ready to begin your benefits.
The choice to start Social Security can impact the income you get for the rest of your life. And undoing a benefits claim is difficult. So, to make sure 2024 really is your year to claim, you should ask yourself a few things first.
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1. How long is your work history?
Before claiming Social Security, you'll want to look at how long you have worked and your wages during those years. You can sign into your mySocialSecurity account to see your earnings record, which will show you the number of years of work the Administration has recorded and the amount you earned in each of those years.
Looking at your work history is important because your Social Security benefit is based on average (inflation-adjusted) wages over 35 years. If you worked fewer than 35 years, you'll have a $0 average wages factored into your benefit for each year that you are short.
If you had low wages at any point early in your career -- perhaps because you were out of work for part of the year or just starting out in a new industry -- you might actually find you don't want that year counted when your benefits are calculated.
Until you have a 35-year career history with wages you are satisfied with, you'll want to keep working because each additional year you put in can replace one from before if you're earning more now than in the past.
2. How will claiming at this age impact your benefits?
It's also important to look at how your age affects your benefits when you decide whether 2024 is your year to claim Social Security. You have a designated full retirement age (FRA) based on when you were born. If you claim Social Security prior to your FRA, benefits will be reduced due to early filing penalties. If you wait and put off claiming until after your FRA, benefits will increase since you can earn delayed retirement credits until age 70.
Take a look at how your current age relates to your FRA and consider carefully how your benefit will either grow or shrink based on that age -- or whether you will get your standard benefit if you're planning to retire right at FRA. If you're thinking of claiming early or late, consider whether you'd rather get more smaller checks or fewer larger ones later on.
3. Do you have enough extra income to supplement Social Security?
Finally, you want to make sure you look at other income sources before you claim Social Security. Benefits won't be enough to support you by themselves.
Your Social Security payment typically replaces about 40% of your pre-retirement earnings, while most people need closer to 80% or 90%. So, check your retirement account balances, pension from your employer, and any other sources of income you'll have coming in once you quit work. Make sure they'll replace the other 40% or more of the income you will need.
Once you've answered these three questions, you can make a fully informed choice about whether 2024 is your year to claim Social Security.
