As you get older, the question of when to collect Social Security retirement benefits will likely come to mind, particularly true if you plan to retire early. In a perfect world, there would be one age that would be ideal. However, your unique circumstances and goals will dictate the best time for you to take Social Security retirement benefits. Let’s dive deeper into all the factors you should consider before making your decision.
Understanding the Basics
Before you figure out when to collect Social Security Retirement benefits, it’s essential to familiarize yourself with the basics. You can claim Social Security at age 62. The caveat here is that if you do so, your benefits will reduce permanently.
If you wait until 66, full retirement age (which will continue increasing until age 67 for those born in 1960 or later), you can expect a larger payment based on your work history. Your benefits will continue to go up until age 70, so the longer you wait to start, the larger the monthly benefit.
Think About Your Life Expectancy
Of course, there is no way to know your life expectancy. However, examining your health and family history can provide insight. If you believe you’ll live decades past retirement, it may be wise to postpone your benefits until a later age.
If you turn 62 and not in the best health, you may want to take your Social Security retirement benefits at an earlier age. Note that the Social Security Administration has discovered that the average 65 years old will live to around 85 with women having a greater life expectancy than men. The life expectancy calculator is a great starting point for calculating your life expectancy.
Consider Other Sources of Income
If you have not saved enough money for retirement, you may be more dependent on your Social Security retirement benefits and need to take them earlier. On the contrary, if you have substantial retirement savings or income from other sources, you may benefit by postponing your initial Social Security benefits starting date.
Keep in mind that if you file for Social Security and continue to work before your full retirement age, your earnings will exceed certain limits, and a portion of benefit will withhold temporarily.
Maximize Benefits with Your Spouse
If you are married, you and your spouse can maximize your lifetime benefits. The 62/70 split is a strategy in which the lower-earning spouse takes Social Security retirement benefits at an earlier age, such as 62, and the higher-earning spouse does not file until age 70. This scenario will allow you access to some Social Security retirement benefits now and a higher benefit amount down the road.
If you and your spouse have earned close to the same salary over the years, both of you may want to delay filing until turning age 70. If only one spouse has been the breadwinner, it may make sense to postpone benefits until 70, leading to the highest possible monthly benefit amount.
Consult Your Financial Professional
Together we can review your financial situation and determine the best time to take your Social Security retirement benefits. Contact us to schedule your Social Security retirement benefits review.