When can I start taking my Social Security benefits?
Now you’ve retired and you’re eager to really start living! Travel, extended visits with family and friends, starting a new hobby or volunteering with a worthwhile cause are all things that top the list of 'What to Do When I’m Done Working for the Man'.
Applying for your social security benefits can boost your freedom in retirement and present you with more options but you should also consider putting it off if it’s practical. If you delay your Social Security application, your monthly benefit will increase over the long run.
The Social Security Administration provides a stream of retirement income for about 63 million people each year. That’s one in five Americans.
You become eligible for SSI Benefits when you turn 62 but your “Full Retirement Age” is 67 (assuming you were born after 1960). The Social Security Administration tries to make this very simple with their online resources.
The bottom line is this: there’s a big financial advantage for those wait. For each year past your full retirement age that you can put off applying for Social Security, your monthly check will increase by 8 percent.
Let’s say you aim to retire this fall at 62, having worked 40 years and ending up with a final salary of $80,000. Your benefit would come to $1,455 a month, according to the Social Security Administration’s website, ssa.gov. But if you could wait and keep working until 66, your full retirement age, you’d get $2,074 a month. At 70, it would be $2,833 — almost double the check you would get at 62.
Still, most retirees don’t take advantage of this. There’s a lot of skepticism about how long Social Security will last. This year the program paid out more in benefits than it took in and the estimate is that that it will exhaust its reserves by 2034.
But if you’re close to retirement age, you have nothing to worry about.
If you must take benefits before age 70, it’s okay! Working longer may not be feasible or you may not have the resources to cover your current expenses, in which case, it makes sense.
There are several online resources to help you calculate your benefit and do the math. Or if you prefer face to face, you can hire a financial planner to create a simple plan that will help you determine if you can afford to defer your social security benefits for a few more years.
Social security is ultimately a longevity decision, none of us knows when we’re going to die but we don’t want to die penniless.
As a financial planner, I have creative suggestions for how to bridge the gap between retirement and enacting benefits such as dipping into your IRA or 401k account if necessary.
Set up a meeting with your financial planner to discuss these calculations and get peace of mind.