David Lerner Associates: Social Security Decisions
As you near retirement when to claim your Social Security benefits is one of the biggest decisions you’ll need to make. Should you begin receiving your monthly benefits at your full retirement age? (56-67 depending on the year you were born.) Should you begin receiving a smaller benefit before your full retirement age – as early as age 62 – or should you wait past full retirement age to receive a larger monthly benefit? You can delay receiving benefits up to age 70. There’s no one-size-fits-all answer. When you begin receiving Social Security benefits is a personal decision and must be based on your unique needs and circumstances.
With pensions disappearing Social Security remains the major source of guaranteed lifetime retirement income for most Americans. Retirees are living well into their eighties on average. In fact, according to the Social Security Administration, about one in four retirees will live past age ninety.
You’ll need to carefully consider your options, because when you take benefits can affect your overall retirement income. Once you apply your retirement benefit will generally be locked in for life. So taking time to explore your options now can help ensure that you have enough retirement income to last a lifetime.
According to the Social Security Administration the majority of American elects to receive early retirement benefits, but this isn’t always a wise decision. Although you can apply for benefits as early as age 62, taking benefits early has financial consequences. Your monthly benefit will be permanently reduced by 25 – 30%, depending on your full retirement age.
For example, a monthly retirement benefit of $1800 taken at a full retirement age of 66 is reduced by 25% to $1350 if taken at age 62 instead. On the other hand, for each year you delay taking benefits past full retirement age your benefits will increase by 8%. In this example, the $1800 benefit will be 32% higher, or $2376, if taken at age 70. Of course, if you begin receiving benefits earlier you’ll potentially receive them over a longer period of time, so you’ll need to factor that into your decision.
If you’re married you’ll want to plan together with your spouse, because when you begin receiving benefits may affect your spouse’s retirement income. Your spouse may be able to receive a spousal retirement benefit based on your earnings record and, in the event of your death, a survivor’s benefit based on what you had been receiving.
Other factors may also affect your decision. These include whether you plan to work after you begin receiving benefits, your income tax picture and other sources of retirement income. To view estimates of your future retirement benefits, sign up to access your Social Security online at the Social Security Administration’s website. (ssa.gov)
Finally, as you near age 62 contact a Social Security Administration representative to discuss your options. Retirement is just around the corner and when it comes to deciding when to begin receiving Social Security there’s a lot to think about, so make sure that you understand your options. Ask question and start planning now.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Some of this material has been provided by Broadridge Investor Communications Solutions, Inc.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC