Are you getting close to retirement age? If so, you’ll need to decide when you would like to begin receiving your Social Security benefits. While you are entitled to begin claiming benefits as soon as you turn 62, you aren’t required to. In fact, you can delay benefits until your full retirement age or even up until you turn 70. The longer you delay taking your Social Security benefits, the higher your monthly payments will be.
According to the Social Security Administration, the full retirement age for individuals who were born from 1943 to 1954 is 66. The full retirement age slowly increases for individuals born between 1955 and 1960. For anyone born in 1960 or after, the full retirement age is 67.
Some individuals don’t have the luxury of putting off their benefits until they reach their full retirement age. If you need the money immediately, you might have to start collecting benefits at 62. Others might have the option to delay until they are 67 or even 70 if they plan to keep working, have accumulated enough wealth to live comfortably until their benefit payments begin, or can rely on other retirement accounts.
Deciding when to begin collecting Social Security is a highly personal decision that varies from person to person based on their individual financial circumstances. Below, we will briefly discuss some of the primary factors to consider if you are trying to determine when to begin collecting Social Security.
Whether You Will Remain Employed
If you plan to keep working up until your full retirement age or past the age of retirement, then you might want to delay collecting benefits, especially if your job is well-compensated. If you are still working when you begin receiving Social Security, your benefit payments will be reduced, and if your income exceeds Social Security’s income threshold, you could end up paying more in taxes on your benefits thanks to the supplemental income you’re earning through work.
Personal Health and Life Expectancy
While it is impossible to predict your life expectancy, if you are in good health, you might want to delay collecting Social Security benefits until you turn 70. On average, men who reach 62 years of age have a life expectancy of 80 years, while women who reach the same age have a life expectancy of 83 years. To fully benefit from waiting to collect benefits until you turn 70, you would need to live until you’re at least 80. If you have a long life expectancy, you could receive more benefits by waiting to collect.
Spousal Benefits
If you are married, you’ll also need to consider your spouse’s needs. If your financial situation allows for it, you could increase your spouse’s survival benefits (and offer them more financial protection in the event of your death) by waiting to begin collecting your benefits.
Other Retirement Benefits
If you have other retirement plans, such as a 401(k), you will need to consider whether the benefits you receive from your retirement account combined with your Social Security benefits will exceed Social Security’s income threshold. If they do, you’ll have to pay taxes on your Social Security benefits. You could potentially avoid a heavier tax burden by delaying collecting Social Security benefits until you reach full retirement age or you turn 70. Unlike retirement benefits, which are 100 percent taxable, Social Security benefits are at most 85 percent taxable.
If you have questions about delaying Social Security benefits or planning for retirement, an experienced elder law attorney is a great resource. Contact our Brandon law firm today at (813) 438-8503 for a consultation with one of our knowledgeable attorneys who can advise you about your options and how they’ll fit into your life.