Additional Coverage:
- Most Retirees Pick the Wrong Month to Start Social Security – Here’s the One That Pays More (financebuzz.com)
When it comes to claiming Social Security benefits, most people focus on the big milestones: age 62, full retirement age (FRA), or 70. But an often-overlooked detail-the exact month you start your benefits-can significantly impact the total amount you receive over your lifetime.
Why the Month You Claim Matters
Social Security pays benefits one month behind. That means the payment you receive in July is actually for June’s benefits.
Because of this, the month you designate as your benefit start date sets the entire payment schedule. Choosing the wrong month can cause you to miss a payment altogether, which adds up to a costly mistake.
The Birthday Rule Explained
To qualify for benefits for a particular month, you must have reached the eligible age for the entire month-not just part of it. For most people, this means your first benefit month is the month after your birthday. For example, if you turn 62 in June, your first eligible month for benefits is July, with your first payment arriving in August.
There is a small exception if your birthday falls on the first day of a month. In that case, Social Security treats you as having reached that age on the last day of the previous month, allowing you to potentially start benefits a little earlier than others born later in the same month.
Timing Is Crucial at Age 70
Delaying benefits until age 70 is often advised because monthly payments increase by about 8% per year after FRA up to age 70. However, some retirees mistakenly delay claiming until the month after their 70th birthday. Since delayed retirement credits stop accruing at 70, this delay does not boost benefits and simply results in missing a month’s payment.
For those receiving $2,000 to $4,000 or more monthly, missing even one payment can represent a significant financial loss.
Missing a Month Can Cost Thousands
Because Social Security benefits last for life, skipping a payment means a permanent reduction in total lifetime benefits. For instance, a retiree eligible for $3,000 a month who delays claiming by one extra month loses that $3,000 payment forever, even though their ongoing benefit amount stays the same.
Tax Planning May Influence Your Start Month
Taxes can also play a role in deciding when to begin benefits. Up to 85% of Social Security benefits may be taxable depending on your income level.
Since payments are received one month after the benefit month, some retirees-especially those with late-year birthdays-may strategically delay their start month to shift payments into a new tax year. This does not increase benefits but can help manage tax brackets or Medicare premiums.
The Bottom Line
While deciding when to claim Social Security often centers on reaching age 62, FRA, or 70, the exact month you choose to start benefits can make a significant difference. Understanding the birthday rule, the one-month payment delay, and selecting your start month carefully can help you avoid losing thousands of dollars and maximize your retirement income.