Approaching retirement can be an exciting time when you plan on how you will be enjoying yourself with friends and family. Naturally, as you prepare your budget for this time in your life, you will consider your sources of retirement income. For most, Social Security income will be a consideration in making these plans. Figuring out when to begin receiving your Social Security is an important decision that will depend on your circumstances and other factors in your life.
At 62 you can begin to draw Social Security benefits. You also have the choice of waiting until you are 70 to begin. The longer you wait, the larger the monthly amount will be. Also, if you choose to begin before you reach what is referred to as your full retirement age your monthly benefit amount will be reduced. Your full retirement age is the age you are entitled to your full retirement benefit from Social Security and is determined by the year you were born. For those born between 1943 and 1954 full retirement age is 66. For those born after 1960, it is 67.
If you decide to begin drawing Social Security before your full retirement age, then your monthly benefit amount will be permanently reduced. According to the Social Security Administration, if your full retirement age is 67, your Social Security benefit is reduced by approximately 30 percent if you start collecting at 62, approximately 25 percent if you start collecting at 63, approximately 20 percent if you start collecting at 64, approximately 13.3 percent if you start collecting at 65, and approximately 6.7 percent if you start collecting at 66. On the other hand, if you delay in drawing your social security until after your full retirement age, you may be eligible for delayed retirement credits which will increase your monthly benefits.
Deciding the right time to begin is going to depend on your circumstances. If you are 62 and in need of income, then it will make sense for you to start drawing your social security benefits. However, if you are in a more comfortable position financially, then waiting until you are 70 may reap the most significant benefit. Another consideration is your health and how long you believe you will live and your marital status. If you are in good health and believe you have many years ahead of you, a later payment will make more sense. On the other hand, if you are uncertain about your health going forward money earlier would probably be the best choice. Another factor to consider is how your decision will affect your survivors as your spouse and dependents will receive different amounts in the event of your death depending on your choices.
We understand how important retirement planning is and can help you evaluate the situation and make informed decisions regarding social security. Please contact us online or by phone if we may be of assistance.