If you have wondered when you should start taking Social Security, you aren’t alone. Between rumors that the benefit could disappear before you retire and questions about when you can claim it, confusion is common. The key is to keep asking questions while making a plan that works for you.
Will Social Security be there when you need it? When can you start claiming Social Security? How much will your Social Security benefit be? What does "full retirement age" mean? When is the best time to take Social Security? What does your marital status mean for Social Security? Do Social Security benefits increase for inflation? Will you pay taxes on your Social Security? Can you change your mind if you’ve already started taking benefits?
Will Social Security be there when you need it?
The answer is most likely yes. The program is funded with a pay-as-you-go system using payroll taxes from workers and employers. Funds added by the current workforce are immediately paid to current retirees. With people living longer in retirement and the potential for a shrinking workforce, the system has begun to pay out more than it takes in. Those are just a few reasons why S
When can you start claiming Social Security?
You can start receiving monthly Social Security benefits any time between age 62 and 70. Since you have paid into the program all your working years, you may think
How much will your Social Security benefit be?
The answer to that question depends on several variables, including how long you work, how much you earn and at what age you choose to claim Social Security. Whether you qualify for spousal or survivor benefits has an impact on the total you receive as well.
If you start taking
The Social Security Administration has a
What does full retirement age mean?
There is no doubt Social Security can be a major source of income for Americans.
If you were born before 1954, you’re already eligible for full Social Security. Full retirement age is 66 if you were born from 1943 to 1954. It increases gradually until age 67 if you were born from 1955 to 1960. If you were born in 1960 or later, your full retirement age is 67.
What is the best time to take Social Security?
The good news is, once you are eligible, there’s no wrong answer when deciding when to claim your benefits. If you need guaranteed monthly income, then you should take it when you become eligible. Otherwise, you may decide to wait to try to optimize for the greatest benefit possible. A
It’s worth noting that if you wait to begin
- Retirement income needs
- Health status
- Family medical history
- Life expectancy
- Employment plans
- Marital status and survivor needs
- Income sources (pensions, investments, 401(k), IRA)
Your life expectancy and health are big variables when deciding when to start receiving Social Security. If you’re healthy or your family history suggests you could live well into old age, you may be able to maximize Social Security benefits. That is why you may want to work with a financial professional who can show you how various claiming scenarios apply to your situation.
What does your marital status mean for Social Security?
If you’re married
Think about your partner’s future income needs. When one spouse dies, you’ll lose the lower of the two Social Security checks you may have received as a couple. If you wait to start taking Social Security, a potentially larger monthly payment may be beneficial for the living spouse.
If you have never married
Primary factors in your decision about when to claim Social Security include how long you plan to work and your life expectancy based on family history and health.
If you’re divorced
You may be able to claim spousal benefits if you were married to your former spouse for at least 10 years. You will qualify if you are at least 62, single when you apply for Social Security and if the benefit based on your work history is less than the spousal benefit.
If you were widowed before age 60 or have dependent children under 16
You may begin claiming Social Security survivor benefits at that age. However, benefits will be reduced if you have not reached full retirement age and also if your income from current employment exceeds certain limits.
If you’re ill, unemployed or have no other sources of income
It may make sense for you to claim Social Security immediately when you retire. But claiming before full retirement age can reduce both your benefit and survivor benefits.
Do Social Security benefits increase for inflation?
There are annual
If you wait to begin claiming Social Security after age 62, any COLA increase that takes effect before you start receiving benefits will be reflected in your monthly benefit.
Will you pay taxes on your Social Security?
The answer to that question depends on several factors. If the only income you have in retirement is Social Security, you likely will not be
Another tax consideration may occur at age 72 when you must begin taking
Your financial advisor and tax advisor can help you determine the most effective way to manage your income sources to help minimize your tax consequences in retirement.
Can you change your mind if you’ve already started taking benefits?
What if you made the decision to start your Social Security benefits at a certain time and then change your mind? There is a one-time option to change, but it must be in the first 12 months of claiming. If you’ve recently retired, monitor whether your strategy is the right one for you, especially if you experience changes to health or employment.
Also note that any benefits you may have received before taking this option will need to be repaid, including any spousal benefits based on your work record. But you’ll get a higher monthly benefit when you restart later on.
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No matter your age, keep in mind that Social Security was never intended to be your only source of retirement income. Since you can get a fairly accurate estimate of what your monthly benefits will be, Social Security can be a foundation of your overall plan.