Now, have you ever wondered if there's any real benefit in delaying Social Security? If so, stay tuned for the next episode of All About FERS. Hi, I'm John Raleigh, Certified Financial Planner with All About FERS, and today we're going to answer a question from Vincent. Vincent writes us. I'm under FERS and planning to retire at 62 but I'm not sure if I should claim Social Security right away or wait till 67 or 70. My pension and TSP should cover my expenses for a while.
Is there any real benefit to delaying Social Security if I have a decent retirement income? This is a really great question, Vincent, and there's a lot of confusion and answers to questions that need to be addressed, because there's a lot of moving parts. We will start with Social Security itself. Social Security is a federal insurance program that provides financial support to workers and their families. It's administered by the Social Security Administration and is
the cornerstone of us social safety net. It was designed to provide approximately 30% of the average retiree's income. Social Security offers benefits for retirement, disability and survivor benefits. These are funded by taxes paid by employers and employees, and because of your question, today, we're only going to concentrate on the retirement benefits. Now, I believe choosing when to start your retirement benefit is one
of the most important decisions you can make. If you choose to start receiving your benefits when you reach full retirement age, your age, based on your question is, will be 67 that's when you'll receive your full retirement benefit. Your benefit will be reduced if you begin receiving benefits before you reach full retirement age. This is considered early retirement benefits. You're considered taking early retirement benefits if you start receiving benefits as early as age 62 if you do,
your benefits will be reduced. If you start early and be reduced approximately a half a percent, on average, every month for the months you start early. For example, if your full retirement age is 67 and you sign up for Social Security when you're 62 you'll receive approximately 70% of your full retirement benefit. Now you can continue to work and still
receive retirement benefits. Your earnings in or after the month you receive full retirement won't reduce your Social Security benefits, in fact, working beyond full retirement age actually could increase your retirement
benefit. However, if your earnings exceed a certain limit before you reach your full retirement age, you will have to pay back part or all of the benefits you receive if you work, but start receiving benefits before full retirement age, your benefit will be reduced $1 for every $2 in earnings you have above the annual limit, and in 2025 the annual limit is $23,400. In the year you reach full retirement age, your benefit will be reduced by $1 for every $3 you
earn over a higher annual limit, and that's $62,160 in 2025. That reduction will continue until the month you reach full retirement age. Now we're going to talk about delayed retirement benefits. If you choose to delay receiving benefits beyond your full retirement age, your benefit will increase a certain percentage depending on your year of birth. Currently, the
percentage is approximately 8% a year. This increase increases automatically each month from the time you reach full retirement age until you start receiving benefits or reach 70 years old, whichever comes first. Once you reach full retirement age, you can keep working and your benefit will not be reduced. You will have your Social Security retirement benefit no matter how much you earn if you choose to continue working beyond full retirement age, your benefit also may
increase. So Vincent, as you can see, there are pros and cons with every decision, and the good news you do have options. I hope this clears up some confusion and helps clarify some of your questions about, should you claim Social Security right away at age 62 or wait till 67, or 70. Thanks for stopping by All About FERS, and until next time, Happy Planning!