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 people argue that starting Social Security at 62 is better because you collect benefits for a longer period of time. This argument is not always correct. If you compare two 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. Everyone’s situation is different. 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. Thanks.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.