Approaching retirement is a time when you will be assessing your ability to be in the right financial position to live comfortably. A good place to begin is by considering your retirement income sources and making a realistic calculation of your available funds. For many people, Social Security and the timing of when to draw this benefit will be an important part of this equation. Here is what you need to know about the best time to file for social security.
Drawing Benefits
The earliest you can draw Social Security is age 62. However, choosing to take Social Security at this age will mean permanently accepting a lower benefit amount. Those born after 1960 who opt for an early benefit can expect to be paid approximately 30 percent less at 62, 25 less percent at 63, 20 less percent if at 64, 13.3 percent less at 65, and 6.7 less percent at 66.
Full Retirement Age
Waiting until your “full retirement age”, which is the age when you can receive a total benefit amount without reduction, will allow you to receive a larger amount. Your full retirement age is determined by the year you were born. People born between 1943 and 1954 have a full retirement age of 66. For those born between 1955 and 1960, the full benefit age is 66 years and 2 months, and that age will gradually rise until the full retirement age reaches 67 for those born in 1960 or later.
Maximum Benefit
If you wait until you are 70 to begin drawing benefits, you can get an even larger payment than you would receive at full retirement age. Additionally, this delay may also provide you with delayed retirement credits which may increase your monthly benefits.
The Right Time
The ideal time to begin Social Security truly depends on what will work best for the recipient. If you are 62, have multiple sources of retirement income, but would like to have the funds for investments, early withdrawal may be right for you. However, if you feel you have adequate income and would benefit more from having a larger amount from Social Security when you are older, it may be sensible to wait longer. If you are experiencing health and financial challenges, the funds may be helpful now. Additionally, if you are married and have dependents, your decision could also impact any benefit they would receive if you were to pass away.
Retirement planning is a complex process which requires taking several variables into consideration. We understand the importance of taking Social Security at the right time and can help you look at your situation and make informed choices. Contact us online or by phone if we may be of assistance.