Applying for Social Security is very straightforward. In fact, applying is perhaps too easy for such an important decision. The more important and complicated question is: When to apply?
Let’s get started with the easy part…
Just follow these 5 steps.
Make sure you make the right decision about when to apply. This is a decision that impacts the rest of your life. (See below.)
Make sure you are eligible.
To apply for Social Security benefits you must be at least 61 years and 9 months old and have worked at least ten years total at jobs where you earn Social Security credits.
Ninety six percent of all American workers are covered by Social Security.
This step might be the hardest part, but still very straightforward.
When it is time for you to apply for Social Security, you will want to gather the information and documents you will need for the application. These include:
- Your date and place of birth
- Your Social Security number
- If you are not a United States citizen, you will need your permanent resident card number
- Name of current spouse and the name of any prior spouse (if you were married for more than 10 years or if the marriage ended in death). The Social Security Administration can help you assess whether filing for their benefits will give you a higher paycheck than filing on your own earnings.
- Spouse’s Social Security number and birth date and the beginning and ending dates of marriage(s)
- Names and birth dates of any children who became disabled prior to age 22 or who are under age 18 (and unmarried). You will also want names and birth dates for children who are aged 18–19 who are still attending secondary school full time.
- Employer details for current employment and any other jobs held within the last two years. This information can be found on your online Social Security statement. You will also need the employers’ names and your employment start and end dates.
- If you are self employed (or have been in the last two years), you will need to report your business type and your total net income.
- If you are going to opt for direct deposit of Social Security benefits into your bank account, you will also need your bank account type and number and also the bank routing number. (If your bank is not in the United States, you will also need the international direct deposit bank country, bank name, bank code, currency type, and the branch or transit number)
With the information listed above, you should be able to complete your application.
Once your application is submitted, the Social Security Administration will contact you if they have any questions. You can also check the status of your application online.
See? So easy!
However, BEFORE you do ANY of the above, please carefully consider when exactly you want to start your benefits. This decision can make a huge difference in your financial well being in retirement. Keep reading for important guidance on this decision.
As stated above, you are eligible to apply for Social Security retirement benefits when you are 61 and nine months. You can start collecting benefits as soon as you turn 62.
However, just because you can, does not mean that you should.
The longer you delay starting your benefits, the more your monthly income will be. In fact, the difference in lifetime income between starting at age 62 and waiting until your maximum retirement age can be more than $100,000 — and for many people much much more.
While you can start benefits at age 62, the Social Security Administration (SSA) considers that “early.” Depending on your birth year, you do not reach what the SSA calls “full retirement age” until sometime between ages 66 and 67.
- For every month prior to your full retirement age that you begin taking benefits, around 0.55% is deducted from your payout.
- And, for every year that you defer your benefits, you will receive a larger amount when you finally do begin drawing Social Security. The amount of the bonus is dependent, once more, on your birth date. For example, someone born in 1944 has a full retirement age of 66. If they start benefits at age 69, they will receive eight percent more benefits for each year they delay.
If you are confused about when to start, you can use the Social Security Explorer — part of the NewRetirement Retirement Planner to compare your monthly income and maximum lifetime payout at different ages.
Or, you might consider the following rules of thumb:
- Take Early: The only people who should consider taking their Social Security early are those who absolutely need the money immediately, or those who do not expect to live for very long, due to illness
- Take at Full Retirement Age: Should you have reason to believe that you will not live past the age of 80, then generally speaking you will maximize your social security benefits if you take them when you reach your Full Retirement Age.
- Wait as Long as Possible: On the other hand, if you are confident that you will live past the age of 80 or 85, then most experts recommend that you defer your social security for as long as you can (age 70), so as to maximize the benefits you receive from it.
- Other: If you have dependent children, the additional benefits you receive for them might make filing when you are younger worthwhile.
It can also be a very good idea to have an overall retirement plan before you decide when to start your Social Security benefits. The NewRetirement Retirement Planner can help you assess all of your sources of retirement income and whether or not you will have enough to cover your expenses. This tool was recently named a best retirement calculator by the American Association of Individual Investors (AAII).