As 2022 draws to a close, now is the time to start thinking about your finances for next year. Whether you’re close to retirement or still have years left in your career, there are some social security measures to take now. While each of these steps doesn’t take a lot of time, they can set you up for a more financially comfortable retirement.
1. Determine your full retirement age
Your full retirement age (FRA) is the age at which you will receive the full amount of benefits to which you are entitled based on your career earnings. If you were born in 1960 or later, your FRA is 67. People born before 1960 will have an FRA of 66 or 66 and a number of months, depending on your exact year of birth.
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The earliest you can file for Social Security is age 62, but for each month you start claiming before your FRA, your benefit amount will be reduced. If you delay the claim for benefits that after your FRA (until age 70) you will receive all your benefits plus a bonus amount each month.
When you know your FRA, it’s easier to decide what age you want to start claiming. If you plan to retire and file for Social Security at the same time, knowing your FRA will also help you determine your retirement age.
2. Check the estimated amount of your benefits
Even if you’re years away from retirement, you can still see an estimate of your future benefit amount. To do this, you will need to check your statements online through your mySocialSecurity account on line. This will give you an estimate of your benefit amount based on your actual earnings throughout your career.
Keep in mind that this number assumes you will be filing with your FRA. If you end up applying for benefits sooner or later, it will affect the amount of your benefits. In addition, if you still have many years left before retirement, the amount of your benefits could change depending on your future income.
3. Evaluate your savings
When you know approximately how much you can expect to receive from Social Security, it’s easier to estimate how much you can expect from your benefits in retirement. From there, you can make a general assessment of your savings to see if they will be enough to bridge the gap between what Social Security will provide and what you need to retire comfortably. If you find that you will receive less than expected from Social Security, you may need to increase your savings rate.
It’s always a wise decision, even if retirement is years or decades away. If you find that you’ll need to rely on your savings more than expected, giving yourself more time to save will make reaching your goal much easier.
A new year means setting new financial goals, and it’s a fantastic time to check that your retirement plans are on track. By making these three key moves now, you can head into 2023 as prepared as possible.
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