Turning around 65 points is a series of retirement milestones. For example, Medicare eligibility begins and employer health insurance often ends. For many Americans, applying for Social Security at 65 feels like a natural transition.
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But this decision can have expensive, permanent consequences. Three retirees shared how to claim compensation at age 65 without understanding the rules, they spent thousands of dollars.
Sandra, 69, applied for Social Security immediately after retirement. Like many people, she believes that 65 is the standard full retirement age.
“I thought 65 was the number of people used by everyone,” she said. “I don’t know there is a difference.”
But Sandra’s full retirement age (FRA) is 66 and 4 months. Because she claimed it was early, her monthly benefits were reduced by about 8.9%. If her full benefits are $2,000 per month, she now earns about $180 less per month.
In 20 years of retirement, there were more than $43,000 in lost income. FRAs vary depending on your birth year, and even submitting a few months before that number means locking in smaller checks.
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James, 76, claims to be 65 because he has already budgeted for a reduction in revenue but has seen no reason to wait. What he didn’t think of was how it affected his wife.
“I just wanted to collect my income and the check was enough to cover what I needed,” he said. “If I died first, I didn’t think about what benefits she would bring.”
As a higher income person, his welfare amount will determine the benefits of survivors after her death. If James waited until he was 70, his interests would be greater.
Linda, 68, retired from a full-time job at 65 and picked up some consultations while she wasn’t ready to stop working altogether. She also applied for Social Security, thinking that the additional income would be helpful.
“No one told me they would get the money back,” she said. “I think once I claim, the checks keep coming.”
Since Linda hasn’t reached the FRA at the time she started asking for Social Security, her part-time income triggered an income test. The Social Security Bureau has kept payments for months. She will recover those lost benefits later, but at the same time, it creates financial stress that she didn’t expect.
