Social Security Benefits: When Should You Start?

The age-old question, “When should I start taking my Social Security Benefits?” is one that has plagued individuals in their late 50s and early 60s for decades. It is a great question that has a frustrating answer – it depends.

Timing the receipt of your social security benefits is both a science and an art that depends on a number of factors, such as your retirement goals, health, family medical history, current and expected future income, current and future expenditures, tax bracket, whether you are married, widowed or divorced, etc.

Most people want to maximize their benefits to ensure long-term security, so they will wait until they reach their full retirement age before receiving social security benefits. Full retirement age is the age at which a person may first become entitled to full retirement benefits.

No matter what your full retirement age is, you can start receiving benefits as early as age 62 or as late as age 70. The catch is if you start receiving benefits before your full retirement age, your benefits will be reduced by a fraction of a percent for each month before your full retirement age. This means for the rest of your life you will not be receiving 100% of your social security retirement benefits.

If you are not in a hurry to start receiving your social security benefits then you can expect an approximately 8% annual increase in your benefits from age 66 to 70. This may be a good idea especially if you have a pension or other retirement funds that are not earning that type of return.

Another consideration to think about when timing the receipt of your social security benefits is your tax bracket. Depending on your income, a certain percentage of your social security benefits may be subject to taxes, which will decrease the overall net value of your benefits.

Navigating through the various personal factors and tax consequences can be a daunting task filled with pitfalls that can impact your retirement plan. It is always a good idea to sit down with a professional to discuss your retirement goals and options with regard to Social Security benefits. You have worked hard and paid in to the system your entire life, so you should not short change yourself when it comes time to your Social Security benefits. A sound strategy for timing the receipt of your benefits will help you realize your goals and maximize your benefits.

For more information on claiming Social Security, view our webinar here.