When to take Social Security?

Sponsored - Are you trying to decide when to start Social Security? It’s a difficult decision for most because if you start benefits before Social Security Full Retirement Age (66-67 depending on DOB) you can permanently lock in a lower benefit amount for the rest of your life. You can start Social Security as early as age 62, but you will reduce your benefit by 25%.

On the flip side, if you defer Social Security beyond your full retirement age, you can permanently increase your benefit. The maximum deferral age is 70, and if your FRA is 66 you can increase your benefit amount by 32%. Waiting until age 70 to start Social Security can increase your benefit amount by 76% when compared to starting at age 62.

Some argue that starting Social Security at age 62 is better because you collect benefits longer than if you wait until full retirement age. This argument is not always correct, especially if you are still working. A portion of your benefit may be withheld if you work and collect benefits. If you compare two retired married couples, one collects benefits at age 62 and the other at age 70, and assume the male lives to age 85 and the female age 88, the couple that deferred their benefits until age 70 received 30% more than the couple that started at age 62. This is a significant difference in income.

So, you’re probably wondering how do I know when to start Social Security? It depends on your financial situation. The three main factors we take into consideration are 1) retirement cash flow needs, 2) sources of liquidity, 3) how long you plan to work. Deferring until age 70 may be best for some, and it may not be what’s best for others. A financial plan can help you answer this question. You need a plan tailored to your financial situation and one that will adjust when life throws curveballs.

We prepare financial plans here at The Jenkins Group. If you would like to get more information, please call or email me.