Three dates on your Social Security statement that decide your check

If you’ve never logged into your Social Security account, do it this week. Not because something’s wrong, but because there are three dates in there that decide how big your check will be for the rest of your life, and most people only ever look at one of them.

I’m not a financial advisor and this isn’t advice. I’m just somebody who stared at his own statement long enough to understand it, and I’d like to save you the staring.

How to get your statement

Go to ssa.gov and look for “my Social Security.” Setting up the account takes about ten minutes and some identity questions. Once you’re in, download the PDF statement.

The statement shows your full earnings history year by year (worth checking for errors, because a missing year lowers your check) and a chart of estimated monthly benefits at different claiming ages. That chart is where the three dates live.

Date one: 62

Sixty-two is the earliest you can claim retirement benefits. It’s also the most popular age to claim, and the one that leaves the most money on the table.

Here’s why. Social Security pays you a reduced amount for every month you claim before your full retirement age. If your full retirement age is 67, claiming at 62 cuts your check by about 30 percent. Permanently. It doesn’t bump back up later.

That’s not a reason never to do it. If you’re in poor health, out of work, or simply need the money, 62 is there for a reason. But it should be a decision, not a default.

Date two: your full retirement age

Full retirement age, or FRA, is the age at which you get 100 percent of your earned benefit. For anyone born in 1960 or later, it’s 67. If you were born between 1955 and 1959, it’s 66 and some months. Your statement tells you your exact date.

FRA matters for a second reason: the earnings test. If you claim benefits before FRA and keep working, Social Security withholds some of your benefit when your wages go over an annual limit. The current limit is on ssa.gov, and it changes every year. In the years before your FRA year, they hold back $1 for every $2 you earn over the limit. In the year you reach FRA, the limit is higher and the holdback is $1 for every $3, and only until the month you hit FRA.

Two things people get wrong about the earnings test. First, it only counts wages and self-employment income, not pensions, IRA withdrawals, or investment income. Second, the money isn’t lost. When you reach FRA, Social Security recalculates your benefit to give you credit for the months they withheld. It’s a delay, not a penalty, but it’s a nasty surprise if you didn’t know it was coming.

After FRA, the earnings test disappears. Work all you want.

Date three: 70

For every month you wait past your full retirement age, your benefit grows. The increase works out to about 8 percent a year, and it stops at 70. There is no reason to wait past 70; you’d just be giving up checks.

Waiting from 67 to 70 means a check roughly 24 percent bigger than your FRA amount, and about 75 percent bigger than if you’d claimed at 62. That bigger number also gets every future cost-of-living increase applied to it, so the gap widens over time.

The break-even idea

People love to run the break-even math, so here’s the short version. If you claim at 62, you get smaller checks but more of them. If you wait until 70, you get bigger checks but fewer of them. At some age, the total dollars cross over. For most people that crossover lands somewhere around 80, give or take a couple of years depending on the exact numbers.

Live past that age and waiting paid off. Don’t, and claiming early did. Nobody knows which side they’ll land on, which is why I think of the decision less as a bet and more as insurance. The one thing a bigger check protects you against is living a long time and running low.

A few things worth weighing before you pick a date:

• Your health and your family’s history of longevity
• Whether you’re still working, and whether the earnings test would bite
• Whether you have other income to bridge the years until a later claim
• Whether you’re married, and which of you has the bigger benefit
• What the statement says the actual dollar difference is for you, not for an average person

Spouses and survivors, briefly

If you’re married, there’s a spousal benefit. A spouse can receive up to half of the other spouse’s full-retirement-age benefit, if that’s more than their own. It’s reduced if claimed before the spouse’s own FRA, and waiting past FRA doesn’t make a spousal benefit any larger. The higher earner generally has to have filed first.

Survivor benefits are different and matter more than people realize. When one spouse dies, the survivor can receive up to 100 percent of what the deceased spouse was getting, including any delayed credits, if that’s higher than their own benefit. A widow or widower can claim survivor benefits as early as 60. This is the biggest reason the higher earner in a couple often waits: that larger check is the one that’s left behind.

Three dates. Pull the statement, find yours, and look at the real numbers next to each one. The right answer is different for everyone, but it’s a lot easier to find once you can see it.