If you're planning to retire in 2024, it's essential to determine if it's the right time to claim your Social Security benefits. As a content writer with over 15 years of experience in personal finance and budgeting, I'm here to guide you through the decision-making process. Before moving forward, let's evaluate three crucial factors: your work history, how claiming at this age impacts your benefits, and whether you have enough income to supplement Social Security. By considering these aspects, you can make an informed choice about whether 2024 is your year to claim Social Security.
Assessing Your Work History
Before claiming Social Security, it's crucial to assess your work history. Sign into your mySocialSecurity account to review your earnings record, which shows the number of years you've worked and the corresponding wages. Keep in mind that your Social Security benefit is based on the average wages over 35 years, adjusted for inflation.
If you have worked fewer than 35 years, each year you are short will be factored in with $0 average wages. It's important to consider if there are any years you would prefer not to be counted, such as periods of low wages early in your career. Additionally, if you're currently earning more than in the past, each additional year of work can replace a lower-earning year from before.
Understanding the Impact of Your Age
It's essential to understand how your age impacts your Social Security benefits. Your designated full retirement age (FRA) is based on your birth year. If you claim Social Security before your FRA, your benefits will be reduced due to early filing penalties. On the other hand, if you delay claiming until after your FRA, your benefits will increase as you can earn delayed retirement credits until age 70.
Consider your current age in relation to your FRA and carefully evaluate how your benefit will be affected. Think about whether you prefer to receive more smaller checks by claiming early or fewer larger checks by delaying. This decision will have a long-term impact on your income throughout retirement.
Assessing Your Income Sources
Before claiming Social Security, it's important to assess your other sources of income. Social Security benefits typically replace about 40% of your pre-retirement earnings, but most people need closer to 80% or 90% to maintain their desired lifestyle.
Check your retirement account balances, pension from your employer, and any other sources of income you'll have once you retire. Ensure that these sources can replace the remaining 40% or more of the income you will need. It's crucial to have enough income to supplement your Social Security benefits and support your financial well-being throughout retirement.