If you’re nearing retirement, you may be considering your income sources, including Social Security. You have options for when to claim your benefits — so when is the right time? As with most financial planning decisions, the answer will depend on your unique circumstances, but it typically comes down to your health, life expectancy, and anticipated payout. View the video to learn what to evaluate when deciding:
What Is the Best Age to Start Taking Social Security?
When deciding when you should begin claiming your Social Security benefits, consider these factors:
- Age 62 is the earliest you can begin taking Social Security; however, your benefits will be reduced by 8% for each year before you reach standard retirement age.
- The standard retirement age is 67 for anyone born in or after 1960; however, your benefits will increase by 8% for every year you delay taking Social Security until age 70.
- Age 70 is the last year you will receive an 8% increase toward your monthly benefits; there is no further advantage to waiting to claim beyond age 70.
Understanding how delaying your benefits can impact the amount you will receive can help inform your decision.
Is It Better to Take Social Security at 67 or 70?
While delaying Social Security will increase your payout, other personal factors could influence your decision, including:
- Are you in poor health? In this case, you may want to begin taking Social Security as early as possible to help ensure you have an income stream for as long as possible.
- Are you in good health? If you are in good health and have a family history of longevity, consider delaying your payments until age 70 to capture the highest benefit.
Will Social Security Still Be Around When I Retire?
There have long been concerns about whether the Social Security program will still exist when younger generations begin retiring. While we can’t predict the future or make guarantees, we can hypothesize about potential changes that could ensure its longevity, including:
- The standard retirement age is likely to be increased in the future.
- Social Security benefits may be subject to more income tax.
- Additional earned income for higher earners may be subject to higher Social Security taxes.
These changes should be relatively straightforward to implement with the necessary political support, suggesting Social Security will likely be around for a long time.
When to claim Social Security is another component of effective retirement planning, and understanding the requirements and considerations is essential. If you need help navigating these decisions as you near retirement, please contact us. We’d be happy to help you scenario-plan to weigh various options and make a confident choice.
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Transcript:
Mark Duvall (00:00- 01:49)
We’re frequently asked what is the right time to take Social Security? And the short answer is it depends on your circumstances. The standard retirement age is 67, and so if you take Social Security earlier than that, as early as 62, then the amount that you receive is dropping 8% per year or, you know, per year prior to when you actually reach standard retirement age.
On the other hand, if you delay as late as age 70, then the amount that you’re going to receive is going to increase 8% per year. So when you’re then thinking about for you, a lot depends upon- Are you in poor health and are your genes not all that good? Well then start early, so that you get as long as you can receiving something.
On the other hand, if you’re in good health and your parents lived a long time, then you’re probably better off to delay as long as you can, you know, potentially all the way to age 70. Now we’re also asked, well, what about is Social Security going to continue to exist? And the reality is, even though we have political difficulties, it’s actually very easy to fix.
They’re going to raise the retirement age sometime from 67, probably to age 70. They’re going to make a more of Social Security taxable. And then finally there’s going to be a little bit more income that’s going to be subject to Social Security tax. All of those fixes combined will easily make Social Security last for a long time.
Written by: Mark Duvall
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