Should I wait to take Social Security?

Published: 08-24-2006
The majority of clients our firm deals with choose to take their Social Security benefits early based primarily on the old adage that ?one in the hand is better than two in the bush.?

Your full retirement age (FRA) is the age when the Social Security Administration (SSA) allows you to collect your full benefit. For workers born before 1939, it's age 65. For those born later, the FRA gradually increases to age 67. Retiring prior to your FRA can reduce your monthly benefit by as much as 30 percent but you may receive benefits for a longer period than if you were to delay them.

Consider receiving benefits early if you need help paying for basic living expenses or if you are single and don't expect to attain normal life expectancy. If you are married, choosing to collect benefits early reduces your spouse's survivor benefit. Those in very high tax brackets can benefit from tax deferral by delaying social security.

If both you and your spouse are living, you can receive:

  • Your own social security retirement benefit or 50 percent of your spouse's benefit.
  • A reduced spousal benefit as early as age 62. Then, at FRA, you can switch to a benefit based on your own earning history. If your spouse takes benefits early, it affects your potential spousal and survivor benefits. Consult your local social security office about your eligibility for this strategy.

A widow or widower at FRA is eligible for:

  • 100 percent of the spouse's benefit or a benefit based on his or her own earning history
  • Reduced survivor benefits at age 60. This reduction is not as severe as if both spouses were living, so consider starting social security early.

You may be able to earn more on your reinvested payments than you would lose by taking a reduced benefit. Your financial consultant can help you make the necessary calculations.

Before making any decisions about when to take your social security benefits, check with the SSA to find out what you are entitled to. Verify your earnings history with their records and correct any errors. Then, visit your financial professional and make sure that you take into account your expected rate of return, your family history of longevity and your personal income needs and health history.

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