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Be Wise With Money

Social Security: Take It Now or Later?

Important factors to consider before taking Social Security

Stephanie Beckwith hears many reasons why people started taking Social Security benefits. The most alarming is, "I was there."

"They'd say, 'I happened to be in the town where the Social Security Administration office is, so I filed,'" says Beckwith, a partner at Thrivent Financial's office in northeast Nebraska. "I talk them through all the alternative options, and they often come back with, 'I wish I hadn't done that. I guess I did have other options.'"

You probably already know that you can start receiving Social Security benefits at age 62. But did you know that you will get less per month than if you wait until your full retirement age? (Full retirement age is 66 for persons born from 1943 to 1954; it increases by two months each year for those born from 1955 to 1959; it's 67 for persons born in 1960 or later.) And if you can hold off until age 70, your monthly benefit will grow even more.

Jean Setzfand, vice president for financial security outreach and education at AARP, sees a lot of confusion about Social Security benefits among AARP members. "People often ask, 'If I collect Social Security before full retirement age, how much will my benefits increase when I reach full retirement age?'"

The answer? Zero. Once you start to get your benefit, that's your benefit for life. So this is a very important decision. Before you take your Social Security, think about:

  • Your life span: The average man who reaches 65 today will live to be 84, and the average woman who lives to be 65 will reach 86, according to Social Security Administration data. The decision you make at 62 or 66/67 or 70 about your benefits will have lifelong consequences, says Gregory Mengel, a Thrivent Financial representative in Schenectady, New York.
  • Your health: You're eligible for Medicare at 65, but it doesn't cover everything. Supplemental coverage, drug costs, long-term care and other expenses could mean you'll need that extra money from Social Security earlier than you might prefer.
  • Your other assets: Most people have an individual retirement account (IRA) or 401(k). Some have a pension. Making these assets last a lifetime is usually retirees' focus, says Alan O'Donnell, who helps Thrivent Financial representatives develop financial strategies for their members. So it can be tempting to draw Social Security early and save your other assets for later. That might not be the best choice.

"Figuring out when to take Social Security can feel complicated," says O'Donnell. "But it doesn't have to be. This is a situation you have control over. You've paid in to Social Security over your working career; let's get the most out of what you've contributed to it."

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