Many people struggle with identifying the optimal age for claiming their social security benefits. Before we jump into the reasoning for waiting or not waiting to take your social security benefits, it’s important to view your situation holistically.
Rather than analyzing your social security on its own, it’s best to view it as one piece of your retirement puzzle. And to solve the puzzle, you must analyze the big picture. One piece of advice we consistently provide is that each financial decision will always depend on your unique set of circumstances. And this challenge is no different. Read on to learn what factors come into play that will help you make the best decision!
Currently, anyone born in 1960 or after, can claim their full social security benefit when they turn 67. However, you don’t have to claim it at that age. You can wait until you turn 70, but then you should take it.
Why wait to claim your benefit?
Each year you delay taking your social security benefit, it will increase by approximately eight percent. That’s a significant amount. So, if you wait, you’ll gain an advantage. Our advice is that if you’re in good health, have longevity in your family, and aren’t in need of the money, then it’s best to wait until you’re 70 to maximize the amount of money you receive.
The other piece of the puzzle has to do with marriage. Even if you’re not in good health or you don’t have longevity in your family, you may want to delay taking your benefit. Why? Because if you pass away, your spouse will receive whichever social security benefit is worth the most.
Finally, more and more people are still working at the age of 67 these days. In general, if you’re still working and receiving a regular paycheck, it’s probably a good idea to delay the benefit so it’s worth more when you’re 70.
Why not wait to claim your benefit?
There are situations where it may be detrimental to wait. Let’s say you’re 62 and you receive a life threatening medical diagnosis. If you only have five years or so to live, then it will behoove you to claim your benefits at 62 so you can take advantage of the money. Or if you don’t have longevity in your family and people tend to die young, that’s another reason to consider taking the benefit earlier.
Additionally, some individuals choose to claim their benefit sooner rather than later due to the misconception that social security is going bankrupt and there will be no money left. While that’s untrue, in the current situation, experts are forecasting that by around 2033 social security will only be able to provide about 78 cents on the dollar of the promised benefit. However, more than likely, something will be done to improve that rate.
Using the above situation as an example, it’s critical to make your decision based on facts rather than emotion. But the good news is, if you do make a rash, emotional decision and later regret it, you can reverse it provided you do so in less than a year of claiming the benefit. You just need to pay back the money you received, wait it out, and reap the greater benefit!
Good luck with your decision on when you will begin to take your social security benefits. And don’t forget to reach out if you have any questions!