Social Security Benefits: It’s All in the Timing

Social Security is a huge part of retirement planning. And the very first decision people make about this critical benefit — when to start Social Security benefits — may be the most important.

If you take benefits too soon, you’ll receive a smaller check each month. But if you wait, you’ll have to get by on other sources of retirement income.

Consider this example of a worker with a Social Security monthly benefit of $1,000 at a full retirement age of 66. As you can see below, her benefit amount decreases significantly if she takes benefits early.

For instance, at age 62 (the minimum age to file for benefits), she receives just $750 per month. If she waits, however, her benefit amount increases to $1,320 at age 70. At that point, no additional delayed credits are earned.

Early vs. Late Retirement

Unfortunately, there’s no hard-and-fast rule about when to start taking Social Security benefits. It really is an individual decision, based in part on your answers to these questions:

  • How healthy are you, and what’s your family history of longevity? If you think you’ll live until a ripe old age, you may want to consider delaying benefits.
  • Will you continue working after collecting Social Security? If so, you should know that working may reduce your benefits up until your Social Security full retirement age.
  • Are you entitled to spousal or survivor benefits? If so, you’ll want to look into your options before starting your own Social Security benefits.
  • What are your other sources of retirement income? If you delay Social Security benefits, could you get by on personal savings and any retirement benefits from your employer?

Discussing these questions with a financial professional is the best way to make an educated decision about when to start Social Security benefits. You can also visit the Social Security website for additional details and resources.

Watch The Principal Blog for more on Social Security. Next in this series — spousal benefits.


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