You spend your hard-working years paying into Social Security and are looking forward to the day you are able to retire and begin to collect. The common question though is, “When is the best time to take Social Security?”. Ultimately, when to take Social Security is a personal decision and no one specific age is best for everyone. It’s important that you understand how Social Security fits into your retirement, because once you begin to collect, you forfeit any future growth.
Your Social Security benefit is based on the number of years you’ve been working and the amount you’ve earned. Your benefit is calculated using a formula that takes into account your 35 highest earnings years. This is important if you plan to work past age 62, as you’ll have the opportunity to increase your retirement benefits even more.
Your full retirement age is the age you are able to collect without your benefits being reduced. Full retirement age continues to increase; it was once a standard age 65, and now has increased based on the year you were born. It’s tempting to take your benefits as soon as you’re eligible, typically age 62. However, your monthly benefits will be reduced if you decide to collect early. What if you waited until age 70 to collect? Each year after your full retirement age that you postpone collecting, your benefits grow by 8% per-year. Ultimately, you have to decide if you’d rather receive a smaller benefit for a longer period of time, or wait until full retirement age or later to receive a larger monthly benefit for a shorter period of time.
Full Retirement Age
|Year of Birth||Full Retirement Age|
|1955-1959||Age 66 + 2 months for every year after 1954|
|1960 & after||Age 67|
When to take Social Security becomes even more complex of a decision for married couples. It’s often preferable that the higher earner start his or her benefits as late as possible. This is so their benefit continues to grow; while the other spouse collects at full retirement age.
There are other considerations that may influence when you start collecting your benefits. These include other sources of income, how your income taxes will be affected, longevity and retirement goals. If you’d like to learn more about Social Security, please feel free to email me at [email protected]. In case you missed our Social Security Seminar, you can fill out the form on the right side of our events page to receive a copy of the presentation!
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