When it comes to a comfortable retirement for many Americans, there is no question that every single dollar counts.
That’s why, according to financial experts, it is ultra-important to know when is the best time to start collecting Social Security benefits. That big decision could depend on an array of things, such as one’s current health, short-term financial needs, and life expectancy.
“When we look at the general population, we are seeing a lot of people take it at sixty-two, early, because oftentimes, people want to retire early,” Chris Hobart, of Hobart Wealth Management, recently told WCNC.
“This gives them cash flow early. Maybe they have poor health and they don’t think they are going to be here long, then it’s beneficial to take it early,” he continued.
Pays to Wait
Moreover, one should also consider the financial benefits of delayed filing for as long as possible—which currently is age seventy.
“Workers planning for their retirement should be aware that retirement benefits depend on age at retirement. If a worker begins receiving benefits before his/her normal (or full) retirement age, the worker will receive a reduced benefit. A worker can choose to retire as early as age sixty-two, but doing so may result in a reduction of as much as 30 percent,” the Social Security Administration (SSA) says.
“Starting to receive benefits after normal retirement age may result in larger benefits. With delayed retirement credits, a person can receive his or her largest benefit by retiring at age seventy,” it adds.
Other experts have chimed in. “If you take the money at sixty-two, you took it early so your breakeven point is somewhere between seventy-seven and eighty-three,” Hobart claims.
According to AARP, “your monthly payment will be 76 percent higher if you wait to start benefits at seventy rather than sixty-two, the earliest possible age.”
Wait Till at Least FRA?
Another expert from the Motley Fool suggested that there are indeed outsized benefits of waiting to file past full retirement age (FRA), which is currently sixty-six and two months (FRA will gradually rise to sixty-seven over the next several years).
“You’re allowed to sign up for benefits before FRA, or later. The earliest you can file for Social Security is age sixty-two, but for each month you sign up ahead of FRA, your benefit gets reduced. The opposite happens if you delay your filing past FRA. For each month you hold off, your benefit will increase by about two-thirds of 1 percent. That means that for each year you wait to sign up, your benefits will grow 8 percent,” she contends.
“Once you turn seventy, you can no longer accrue the delayed retirement credits that cause your benefits to grow. But if your FRA is sixty-seven and you delay your filing until the age of seventy, you’ll snag a 24 percent boost to your Social Security income that will remain in place throughout your retirement,” she continues.
Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.