Timing is Key: The Best Month to Claim Social Security

As you grow closer to claiming Social Security, you may wonder when you should do it. Is one month better than the other? Here's the truth: It doesn't matter which month of the year you claim Social Security -- as long as you've thought through the tax ramifications of your decision.

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While you can make the claim any month you'd like, consider how different times of year can produce different results at tax time.

Claiming early in the year can:

• Increase your taxable income for the year. This may be an especially important point if you're also still working.
• Knock you out of the running for certain tax credits by increasing your income too early in the year.

Claiming late in the year may:

• Potentially keep you in a lower tax bracket (if claiming earlier would have put you in a new bracket).
• Push the tax burden to the next year, which could benefit you if you expect a lower income the following year.
• Allow you to look back at how much you've made that year (including your new SS benefits) to determine whether you want to tap other sources -- like a retirement account -- or wait until the new year.

Claiming midyear could:

Provide the best of both worlds. You not only know how much taxable income you've earned so far, but you can also determine how much more money you can bring in for the year without triggering higher taxes.

Once you decide when to claim, here's what to expect

If you've reached full retirement age (FRA) and file for benefits, there are two things worth keeping in mind: First-year payment structure and tax implications.

First-year payment structure

Let's say you reach full retirement age in 2027. Since the Social Security Administration uses your age in months rather than years when calculating your monthly benefit, you will only receive payments for the months you're eligible instead of the entire calendar year. For example, if you make the claim in March, you'll only receive benefits from March onward. And since Social Security benefits are paid in the month following the month they're earned, your first check won't arrive until April.

Tax implications

Taxes don't stop in retirement, and taxes should play a role in how you plan for your first year of receiving Social Security benefits.

Depending on how close you are to the next tax bracket, you may want to choose a month that allows you to avoid "income bunching." Income bunching occurs when you receive both employment income and Social Security benefits in the same year. While that's not necessarily a bad thing, income bunching can lead to several issues.

• Higher tax bracket: The combination of earned income and Social Security benefits can be enough to push you into a higher marginal tax bracket for the year.
• Social Security taxes: Depending on your combined income, up to 85% of your Social Security benefits may be taxable. Combined income includes adjusted gross income plus nontaxable interest plus half of Social Security benefits. The more you earn in a year, the more taxes you'll pay on benefits. For example:

Data source: Fidelity

• Medicare IRMAA: IRMAA stands for Income-Related Monthly Adjustment Amount and is an additional charge the SSA adds to Medicare Part B and Part D beneficiaries with higher incomes. To determine IRMAA, the SSA uses your income from two years earlier. That means if you claim in 2027, Medicare will look at your 2025 income to determine your Part B and Part D premiums. If your earned income plus your Social Security benefits push you into the higher-earning category the first year you claim, you could find yourself paying more for Parts B and D two years later.

Let's say you want to claim benefits, but since you're still working, you're concerned about income bunching and want to minimize your tax load for the year. There's no harm in waiting to make your claim later in the year. Here's why: For every month you delay claiming Social Security once you hit FRA, your benefits permanently increase by 0.67%. For example, if your benefits are scheduled to be $2,000 per month but you wait 10 months to make the claim, your benefit would be 6.7% higher, or $2,134.

As you consider the right time to make a Social Security claim, you may want to meet with a financial or retirement advisor who can help you determine if there's a "best month" for you.

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