My advice? Before you decide when to apply, do your research and get the facts about your benefit options.
Start with your Social Security Statement. Look at your estimated benefit rates at age 62, at your Full Retirement Age (FRA), and at age 70. You will see that the longer you wait to start your benefits the higher your monthly income. The trade off is that you will receive fewer monthly checks over your lifetime. So which is best for you?
Look at the chart below for an example of a boomer whose FRA benefit at age 66 is $1000. If he or she applies at 62, the monthly benefit is reduced by 25% to $750/month. By waiting until age 70 to apply, our boomer can receive a higher benefit of $1320/month.
By comparing total benefits paid at different ages under each option, we see that the initial advantage of choosing benefits at age 62 in this example is gradually lost sometime before age 80. After age 80, starting at age 70 becomes the most advantageous due to the higher monthly rate. It also guarantees a higher monthly income in later years when other financial assets may have been depleted.
Does this mean that everyone should wait until age 70 to apply? Not at all! There are plenty of other things to consider:
- How is your health?
- Do you plan to keep working past age 62 or have other income to maintain your standard of living until age 70?
- How will Social Security benefits affect your tax liability?
- Are you married, divorced, or widowed and potentially eligible for benefits on a current or former spouse's Social Security record?
Before you commit yourself to a course of action, make sure you have all the facts that apply to your unique financial and family circumstances. Finally, consider consulting with an expert on Social Security to help you find the benefit option that fits you "like a glove."
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My husband and I both retired (he's 62, and I'll be 62 in December). We both still work and have incomes, so it doesn't make sense for us to take SS now. How much does Social Security get reduced if you get income from work? Isn't there an age when SS doesn't get reduced if you work? 72?
ReplyDeleteYes, there is an earnings limit that applies when you are below your full retirement age (FRA). For you and your husband, that is age 66. Even if you both plan to continue working until age 66 or later, you can receive your full benefits beginning with the month you each reach age 66. Check out my post on Earnings Limits for details.
ReplyDeleteSince you and your husband are both about the same age, you may want to consider whether one of you should apply as a spouse at age 66 and then switch to a delayed retirement rate that is 32% higher at age 70.
I do provide a Personalized Benefit Analysis (see My Links) which compares your benefit options to identify the optimal age and type of benefit that would maximize your lifetime benefits as a couple.