Social Security is known for its complex rules and regulations, but a new development is about to shake up the way you claim your benefits. After years of controversy and debate, Social Security has announced a major U-turn on a new policy that will change the way you claim your retirement benefits.
According to Social Security Administration (SSA), this move comes as an effort to simplify the process and give claimants more flexibility, but it’s not without its pros and cons. If you’re planning to retire or are already receiving benefits, this news might affect you in ways you never imagined.
What’s Changing with Social Security’s New Policy?
The policy change affects those who are approaching retirement age, as well as individuals who are already receiving benefits. Starting next year, Social Security beneficiaries will be given more control over when and how they receive their benefits, offering them a bit more flexibility to plan for their retirement.
With the new policy, AARP reports that claimants can now choose to receive benefits as early as age 62 and delay them up to age 70. Additionally, the policy will allow claimants to receive benefits for a full or partial month, rather than just the standard monthly payment.
How Will This Affect Your Retirement Benefits?
The new policy aims to give claimants more control over their benefits, but it might not be a straightforward change. For example, if you claim benefits as early as 62, your monthly payments will be reduced by a certain percentage, while delaying benefits until 70 will increase your monthly payment. It’s like collecting an annuity or purchasing a life insurance policy, the timing of when you start collecting or investing will affect your monthly payouts in retirement.
According to the SSA, this new policy will also allow claimants to receive benefits for a partial month, credit for up to 30 days, enabling you to claim benefits as soon as your Social Security starts processing.
What to Know Before Making Any Changes
While the new policy is seen as a move towards simplification, it’s essential to keep in mind that the goal is to receive the maximum benefit possible. According to Investopedia, generally speaking, the longer you delay your Social Security benefits, the higher the monthly payout will be.
It’s also worth noting that this policy change might not be suitable for everyone. If you’re not sure about when to claim your benefits or how this policy will affect you, it’s best to consult with a financial advisor or a professional who can help you navigate the complexities.
How to Prepare for the Change
The key to making the most of this policy change is planning ahead and being fully informed. The SSA recommends that you consider factors such as your life expectancy, current income, and retirement goals before making any changes.
Some professionals recommend considering factors such as taking advantage of this flexibility, especially since claiming benefits earlier can still result in a significant monthly check, and phasing in benefits to automatically receive a higher monthly payout at 70, reflecting the annual cost-of-living adjustments (COLAs) accumulated between 62 and 70. However, please note that this is an individualized situation and should consult an expert for personalized advice.
