Thinking about taking retroactive Social Security benefits? Think again
As most of those eligible for Social Security know, your “full retirement age” is when you will get 100% of the benefit you have spent a lifetime earning. Full retirement age today is somewhere between 66 and 67, depending upon the year you were born, and more and more people are electing to wait at least until then to claim their benefits. But suppose you plan to claim at your full retirement age but forget because you are wrapped up in other things, like work or vacations or a myriad of other possible developments. Or suppose you intentionally delay claiming to well past your full retirement age to increase your benefit and then, just as you are about to apply, you find out you have a special option: You can receive up to 6 months of retroactive benefits and walk away with a nice lump sum in addition to your monthly benefit. Sounds great, right? Well not so fast! If you take that retroactive lump sum you are actually reducing your Social Security benefit amount because you’re changing the effective date of your application to something less than the current date. As this Forbes article by Tom R. Hager explains, the retroactive lump sum may be tempting, but think twice because a smaller benefit for the rest of your life may not be such a palatable idea. Click here to read more.