How Do I Decide When to Take Social Security Benefits?
When Is the Best Time to Claim Social Security?
The age at which you claim Social Security significantly affects your benefits. The following factors should be considered:
Key Ages for Social Security
Early Claiming (Age 62): You can start receiving benefits, but they will be permanently reduced.
Full Retirement Age (FRA, Age 67): At this age, you’re entitled to 100% of your calculated benefits.
Delayed Claiming (Up to Age 70): For every year you delay past FRA, your benefits increase by 8%, maxing out at a 24% increase.
Break-Even Analysis
Let’s look at an example:
Claim at 62: $1,500/month. By age 70, you’ve received $144,000 in total.
Claim at 67 (FRA): $2,000/month. By age 70, you’ve received $72,000.
If your life expectancy is 82, the total benefits even out:
Claiming at 62: $1,500 × 240 months = $360,000.
Claiming at 67: $2,000 × 180 months = $360,000.
Living past 82 means waiting until FRA results in higher lifetime benefits. However, if family history or health concerns suggest a shorter lifespan, early claiming may make more sense.
Considerations Beyond the Math
While financial calculators are helpful, they can’t predict your life expectancy or factor in the time value of money. Consider your health, family history, and overall financial situation when making this important decision. These calculations are only tools to illustrate for us what could be, and to help us determine the hypothetical pros and cons of determining a withdrawal age.
No matter what age you are, it’s never too late to begin making your current income work for you through other retirement means like a Roth IRA or traditional 401(k).
All situations are unique, and we’re here to help you navigate the options. Book a consultation call with us today to see how we can build a roadmap to the golden years with you.