When to Start Taking Social Security

By Larry Lane for InvestorZoo.com

When to take social security is a very difficult question and is more of an art than a science. Previously when you turned 65, you collected your monthly social security check. Currently, you can collect a reduced amount as early as age 62. However, the government has also increased the age to receive full social security benefits. Originally 65, it has now been raised to 70. This range in age requirements affects those born in 1938 or later.

How much will I receive?
The social security administration sends out an annual statements by mail detailing your benefits. You can also see your benefits on line as well by going to www.ssa.gov; click “retirement calculator”. Remember, these are just estimates. Your actual benefits may vary depending on your already accumulated and future earnings.

Let’s look at an example:
A worker whose monthly social security benefit of $1,060.00 at age 62 will increase to $1505 if they can wait until age 67. Wait an additional 3 more years, take your social security at 70 and your monthly social security check will increase to $1867. In any event, the government sets each amount so, that you’ll receive roughly the same amount over your lifetime.

Benefits of receiving social security early
When is the optimal time to start collecting social security? If you need to put food on the table and pay living expenses, take social security ASAP. If you take your social security benefits as soon as possible at age 62, you may have a leg up on those who wait until 67 or 70. If you take social security at 62, you will have taken in $63,600 before those who wait to take the social security benefits at age 67 and $101,760 at age 70.

Collecting money from social security early may allow your other investments to grow. If you have money in a Roth IRA, there is no minimum distribution age. You could collect your social security money and let your investments continue to compound interest and tax free.

Health factors:                                                                                            While we’re living longer more productive lives, delaying your social security benefits is gambling on your longevity. If you suddenly die, you are leaving a lot of money on the table not only for yourself, but your heirs as well.

Tax concerns:                                                                                                Are you planning to work between 62 and your full retirement age? Your social security benefits may be taxed. Please see your accountant for current tax laws.

Inflation:                                                                                                      You’re thinking great, I’d love to receive $1060 per month right away. Before you decide, think about inflation. If you can hold out until age 70, you’ll receive $1867, an 80% increase over those who took their social security benefits early. That 80% increase in monthly payments may go a long way when you’re no longer working.

Lifestyle:                                                                                                 Chances are you’ve worked or are planning to work for 40 or more years of your life. In the end, if you don’t need social security to pay for living expenses, your lifestyle may be the determining factor. Do you want to continue to “get by”? Will you take your extra social security money to dine out at a restaurant a few times a month or do some leisure activities? Do you have enough now to sustain your current lifestyle without having to tap social security? These are all questions retirees must ask themselves when considering when to apply for social security benefits.

If you are married, talk to your spouse and envision your retirement. You’ll no longer have the stresses of work or punch a time clock. What you will have is a lack of income, the specter of inflation eating away your purchasing power and health insurance issues to deal with.
Plan now and you can sleep soundly that you stand to make your golden years the best years of your life.

Larry Lane is the editor for InvestorZoo.com, a social media web site dedicated to personal finance. Questions and comments can be sent to Larry.Lane@InvestorZoo.com

The article above is intended to provide information of a general nature and may not be suitable for your individual situation. Please consult a qualified licensed financial advisor before making any financial decision.