Many pre-retirees plan to have Social Security as part of their retirement income strategy. However, few plan ahead for when they want to start taking their Social Security benefits as part of their larger retirement plan.
You have three options for taking your benefits:
Some people choose to start taking their Social Security benefits at 62, before their full retirement age. If you apply at 62, your benefits could be 25-30% lower than the primary benefit amount that you would have received at full retirement age.
However, for some, receiving reduced payments early on in retirement can be beneficial. For example, if you have immediate expenses that your savings won’t cover, enrolling in Social Security early may make sense. Alternatively, if a reduced Social Security payment could positively impact the tax strategy of your additional retirement savings vehicles, it may be worth considering. But consider it carefully, as this reduction is permanent.
Taking Social Security at your full retirement age, or even delaying when you take Social Security, is worth considering, as well. Although there are immediate financial benefits to receiving a reduced Social Security benefit before your full retirement age, waiting may result in even more positive financial rewards down the road. For example, if you choose to delay your Social Security benefits beyond your full retirement age, you could:
When you decide to take your Social Security benefits depends on a few different factors. These might include:
One way to help determine when to take Social Security is to work with a fee-only financial planner to perform a break-even analysis. Together, the two of you can determine how Social Security fits into your comprehensive strategy.
Want help? Contact us today. We’d love to talk to you about your retirement income plan!
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"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.