4 Things You Must Do Before You Claim Social Security
Written by
John Csiszar
Edited by
Gary Dudak
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Claiming Social Security is about more than just filing the requisite paperwork with the Social Security Administration (SSA). You should also use the months and years before you actually file to get your financial life in order.
Even in a relatively short period of time, there are certain things you can do both to prepare yourself for your financial life after retirement and potentially even boost your future Social Security earnings. Here’s a look at four things you must do before you claim Social Security.
Review Your Claiming Options
For those born in 1960 or later, the standard or “full” retirement age is now 67 in the eyes of the SSA. This is the age at which you’ll receive the full amount of your earned benefits.
However, you’re allowed to claim Social Security as early as age 62 or as late as age 70. Delaying your filing past age 67 will boost your payout by 8% per year until age 70, for a maximum increase of 24%. In other words, if your standard retirement benefit is $2,000 per month, it will jump to $2,160 at age 68, $2,320 at age 69 or $2,480 at age 70.
The opposite is also true. If you claim benefits at age 62, your payout will be greatly reduced, by roughly 30%. On the flip side, you’ll receive 60 additional checks vs. if you wait to file until age 67. So, for example, if your full retirement benefit is $2,000, by filing at age 62, you might receive closer to $1,400. However, you’ll receive roughly $84,000 in checks by the time you reach age 67.
Social Security payouts are actuarially determined, so theoretically, if you live an average lifespan, you’ll receive the same amount in benefits regardless of whether you file at age 62, 67, 70, or any age in between. But human beings are not averages, so there may be a filing strategy that makes more sense for you.
If you have a well-funded retirement account, for example, you might be able to afford waiting to file until age 70, maximizing your monthly payout. The same is true if you anticipate living a long life. But if you have health issues and/or no other viable sources of income, you might want to claim your benefits as early as possible.
Pay Down Your Debts
Debt is a major drag on your finances while you’re working, but it will become even more of an albatross once you retire. After switching from a regular (and growing) salary to a fixed income, you won’t have as much wiggle room in your budget to handle things like rising debt obligations.
This is especially true if your main source of income in retirement will be Social Security, where an average monthly payout of $1,790.56 (as of July 2023) doesn’t leave a lot of room for debt payments.
Find Alternate Income Streams
With the average monthly Social Security benefit topping out at under $1,800, most seniors will want additional sources of income to help fund their retirements. But this can be hard to do once you’re actually retired.
Before you hang up your work boots and file for Social Security, look for passive streams of income that can help carry you through retirement. Popular options include a hobby that you turn into a side business, rental income you derive from separate properties or extra rooms in your own house, or even simply downsizing and turning that equity into income-generating investments.
The more sources of income you can set up before you retire, the less likely you’ll have to rely on your Social Security payments.
Maximize Your Earnings
If you’ve still got a few years before you retire, do your best to maximize the amount you earn until you retire. The Social Security Administration only considers your top 35 earning years when calculating your benefit, so the more you can earn those last few years before retirement, the more likely you are to kick out lower-earning years from the calculation and boost your benefit.
Postponing your retirement by just a couple of years can do wonders for your Social Security payout, as you’ll benefit from the double-whammy of posting more high-earning years and delaying the age at which you file.
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