Many retirees feel the pressure to take Social Security immediately, or delay it for proposed maximum benefits. Taking your check at the right time can mean the difference between tens of thousands of dollars during your lifetime in benefits.
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Social Security is a vital component of retirement planning for many Americans. It provides a steady stream of income to support individuals and families during their golden years. However, the decision about when to start claiming Social Security benefits can have a significant impact on your financial well-being in retirement. Here are seven factors to consider as you plan your Social Security:
1. Understand your full retirement age: The full retirement age, as defined by the Social Security Administration, is the age at which you can receive your full retirement benefits. For individuals born in 1960 or later, the full retirement age is 67. Understanding your full retirement age is crucial as it determines when you can start claiming benefits without incurring any early or delayed retirement penalties.
2. Consider your life expectancy: When deciding when to claim Social Security benefits, it’s essential to take into account your life expectancy. If you have a family history of longevity and expect to live well into your 80s or 90s, it may make sense to delay claiming benefits to maximize your lifetime income. On the other hand, if you have health issues or a shorter life expectancy, claiming benefits earlier might be more beneficial.
3. Evaluate your financial situation: Assessing your overall financial picture is crucial to making an informed decision about when to claim Social Security benefits. Consider factors such as your retirement savings, pension benefits, and other sources of income. If you have a substantial retirement nest egg, you may be able to delay claiming Social Security benefits and rely on other income sources in the meantime.
4. Understand the impact of early or delayed claiming: Claiming Social Security benefits before your full retirement age will result in a reduction in your monthly benefits. On the other hand, delaying benefits beyond your full retirement age can lead to an increase in your monthly benefits. Understanding the impact of early or delayed claiming on your lifetime income is essential to making an informed decision.
5. Consider spousal and survivor benefits: If you are married, divorced, or widowed, you may be eligible for spousal or survivor benefits based on your spouse’s or former spouse’s work record. Understanding the rules and options for claiming spousal and survivor benefits can help maximize your household’s overall Social Security income.
6. Factor in the impact of working in retirement: If you plan to continue working in retirement, you need to be aware of how your earned income can affect your Social Security benefits. Claiming benefits before your full retirement age while still working can result in a reduction in your benefits if you exceed the annual earnings limit. On the other hand, delaying benefits can help maximize your lifetime income, even if you continue working.
7. Seek professional advice: Planning your Social Security benefits can be complex, and the decision has long-term implications for your retirement income. Consider seeking advice from a financial advisor or retirement planner to help you navigate the various factors and make an informed decision that aligns with your financial goals and retirement needs.
In conclusion, planning your Social Security benefits requires careful consideration of multiple factors, including your full retirement age, life expectancy, financial situation, spousal and survivor benefits, the impact of early or delayed claiming, the effect of working in retirement, and seeking professional advice. By taking these factors into account, you can make an informed decision that maximizes your lifetime income and supports your retirement goals.
Social Security is Federal welfare for seniors
I am utterly thankful for stumble upon this educational program from you, God bless
I am turning FRA next year Aug 2023, I planned to collect my benefits (still working til Aug) in Mar which $66 less per month but I will paying off my mortgage when Aug comes, so $66 is nothing compared to paying off the mortgage; it prompted me to ask you this question, so as I am still working while collecting, does my benefits increase in later date from the Retirement Benefit?
Much appreciated.
Mr. Scheil, @Cardinal Advisors, you mentioned the plan that your wife will wait for you to file and you plan to wait until age 70. You did not state your relative ages or if she has the necessary 40 quarters, but you did mention "on her earnings". If her benefit is small, why would you not encourage her to file at her FRA. At that point she would get something until you file at 70, at which time she would receive 50% of your PIA. This would provide a small amount sooner and the same amount later. That small amount might pay some or all of her Medicare cost. Perhaps the timing of couple filing is a great topic for another video.
After FRA, does it make sense to claim on a month other than you birth month? The SSA will only send the full benefit with the partial year of Delayed Credits on birth month. For instance, if you claim at 68.5, you will initially get benefit checks as if you filed at 68. Later at age 69, you will get the appropriate increase; the short fall is never paid but it is only shortage of 11 months.
How many month choices are there? One may sort-of start SS at the end of every month from ages 62 until age 70, so it would seem that there are 96 choices. For a select few, there are 96 choices, but for the vast majority, there are only 95 choices. In the eyes of SS, one attains their age on the day before their birthday and one must be eligible for the entire month to claim benefits for that month. Together these say that anyone born on the 1st or 2nd of a month may actually claim at the end of the month they turn 62, but all others must wait one more month, so they loose one of those 96 choices. The beginning of the month you turn 62 is not available because of the month of eligibility rule.
every one starts at 62 and no one has any money after that. nobody gets hired after they are 65. there is a lot of wishfull thinking in this.
Is the social security benefit amount indicated on the s.s website accurate?
If you take SS and have a fixed payment for life, do they adjust that later for inflation? Or only prior to the first payment?
Sir you make me feel very hopeful and not a horrible person because my 401k is not a million dollars!
draw at 62 if you have another income from retirement. Enjoy life while able and healthy. I was able to do that from a good career and paying cash for my homes and vehicles. I have SS and a income rider started years in advance of retiring. Getting the money 4 years from 62 to 66( 48 payments) ….it takes at least 13 years to get that 4 years of money from higher payments at 66. you will be about 80 if alive to get the 48 payments back from higher payouts
You say your waiting until your 70… Are you not concerned it will run out of money. All the programs you here the Fed is talking about right now, does not have any plans to replenish the Social Security Trust Fund. I am 64, and I keep saying take it at 66 1/2 because it may be less by 70.
He has such a gentle way of explaining things….kind of like my dad, RIP. I wish I paid better attention when he instructed me on personal finance, but I was younger and naïve. Now that I am older than Mr. Cardinal Advisor, it is making more sense. I guess it is better late than never to learn!