When should you start taking your Social Security Retirement Benefits? The answer depends on many factors that include but are not limited to your age, health, current assets, cash needs and marital status. Ultimately, your decision is a personal one.
The longer you delay benefits, the more your Social Security payments will be.
Your full retirement age varies based on the year you were born. Your full retirement age will also determine when you can receive 100% of your benefit. If you collect before your full retirement age, you will receive less than 100%. Conversely, delaying social security payments beyond the full retirement age will allow you to collect a more significant amount.
The earliest you can access Social Security is age 62 but will result in a reduced amount. Any inflation-based increases will also be based on the lower amount. If you have started taking Social Security and later want to delay payments, you only have 12 months to request the change.
Your years in retirement may be longer than you think.
Even if you don’t have longevity in your family, it is wise to plan for the long term. When reviewing Social Security options with clients, I encourage them to use at least age 90 as an assumption. I will never forget a client that had significant health issues and even a severe injury from a car accident. The client lived into her late 90’s. It is estimated that about 1/3 of people age 65 today will live to age 90, and one in seven will reach age 95. Women, on average, live longer than men. As a friend explained to me after his second divorce, the reason is simple “we just want to.”
Married couples need to plan for two lives. If you are the higher earner, and you delay starting your retirement benefit, it will result in higher monthly benefits for the rest of your life and higher survivor protection for your spouse if you die first. There are other considerations for married couples. These claiming strategies can also affect the total benefits paid.
Can you collect social security while you’re working?
Yes. Here’s how that works:
When you reach your full retirement age, you can work and earn as much as you want and still get your full Social Security benefit payment. If you’re younger than full retirement age and if your earnings exceed specific dollar amounts, some of your benefit payments during the year will be withheld. This doesn’t mean you must try to limit your earnings. If withholding some of your benefits because you continue to work, you will get a higher monthly payment when you reach your full retirement age. So, if you work and earn more than the exempt amount, it won’t, on average, decrease the total value of your lifetime benefits from Social Security — and can increase them. When you reach full retirement age, your benefit will be re-calculated, and for the months you didn’t get a benefit because of your earnings, you’ll get a credit.
Even if you are delaying social security, remember you must still file for Medicare 3 months before your 65th Birthday. Failing to enroll in either Medicare medical insurance or prescription drug coverage, you can still sign up, but you may pay a late enrollment penalty.
I would encourage you to sit down with your financial advisor to discuss essential options before applying for benefits. With few exceptions, once an option is chosen, it can’t be changed.
The Social Security website offers a benefits calculator.
This will give a good starting point on which to base your decisions about Social Security.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
August 2021
