Aloha. I am trying to help a family member who was born in 1951 and so (I think!) he qualifies for Social Security benefits when he turns 66 in August. He said that he is concerned about applying during a “rat hole” - a relatively short period of time after one qualifies during which benefits are calculated at a lower value. Do you understand the term, and is there any reason that he should not just file on schedule in August? Any clarification would be greatly appreciated!

Hi,

I'm have no idea what your family member is referring to. He would be full retirement age (FRA) at age 66 if he was born in 1951. And, like everyone else, his retirement benefit rate would be calculated based on an average of his highest 35 years of work-adjusted earnings (https://www.ssa.gov/pubs/EN-05-10070.pdf). If he files effective with this August, his 2017 earnings can't be used in the computation until January 2018, so maybe that's what he's thinking. He may also want to consider waiting until age 70 to apply, at which time his benefit rate would be 32% higher than if he starts drawing at age 66.

Anyway, your relative would be well advised to run the maximization software available on this website before filing. That way, he can explore all of his filing options in order to determine the best strategy.

Best, Jerry