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The Best Age to Take Your Social Security is…

by smeneshi - Apr 29, 2015

With millions of public sector Baby Boomers retiring over the next 20 years, deciding on when to take your Social Security benefits will be front and center when planning for retirement.  Picking the right age to take your benefits will be one of the biggest financial decisions you’ll ever make.  In fact, one of the most frequent questions my clients ask me is what the best age is to begin taking Social Security.   The answer of course depends on your individual circumstances.

To help you make the best decision when it comes to claiming your Social Security benefits, here are some important questions to ask before deciding on the right age to claim:

  1. What are the crucial Social Security ages I should pay close attention to?
  2. Should I take my benefits even if I’m working?
  3. What’s my life expectancy?
  4. How will my decision to claim benefits affect my spouse?
  5. How do I get the most Social Security income possible & what’s the best age to start taking benefits?

1. What Are the Crucial Social Security Ages I Should Pay Close Attention To?

  • In most cases, age 62 is the earliest you can start taking Social Security benefits.  Even though you can start pulling income from Social Security at age 62, most of you will get more overall income during your lifetime by waiting until you’re at least age 66. If you do start taking benefits at age 62, you’ll get a smaller monthly payment, but for a longer time of course.
  • Age 66 is the Full Retirement Age (FRA) for millions of government Baby Boomers. For many of you, age 66 could be the best age to claim your Social Security benefits. If you were born between 1943 and 1954, you’ll get 100% of your Social Security income benefits at age 66 (source: Social Security).
  • Age 70 is the oldest age to start pulling Social Security benefits. If you wait until age 70, you can get up to 132% of your Full Retirement Age (FRA) income benefits. For many of you with a small pension, age 70 may be the best age to claim Social Security and by waiting, you can maximize your monthly income.

2. Should I Claim Benefits Even If I’m Still Working?

If you’re still working and claim benefits before your Full Retirement Age, the Social Security Administration will penalize you for any income over your yearly earnings limit. According to the Social Security Administration: “If you are under Full Retirement Age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2015 that limit is $15,720. Also in the year you reach Full Retirement Age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2015, the limit on your earnings is $41,880 but we only count earnings before the month you reach your Full Retirement Age.”

You can read more about getting benefits while working at www.socialsecurity.gov/retire2/whileworking.ht

 

457 plan

3. What’s My Life Expectancy?

How long you’re expected to live is a major determining factor when deciding on when the best age to take your Social Security benefits is.  Of course, things can happen to us at any age, but a reasonable guide is to look at your family history. Are your parents still living? If so, what is their quality of life? If you just want to stick to the hard statistics, then consider this:

  • A 65 year old male is expected to live until age 84 (and three months)
  • A 65 year old female is expected to live until age 86 (and six months)

To check your life expectancy, simply CLICK HERE.

 4. How Will My Decision to Claim Benefits Affect My Spouse?

If you’re married, taking Social Security benefits before your Full Retirement Age is a decision that should be made with extreme caution. For example, consider this scenario: Let’s say you’re 65 years of age and your spouse is 62. You plan on retiring soon and will immediately begin taking your Social Security benefits. Here are a couple of things to keep in mind:

  • Health Insurance – Since you’re 65, once you retire you’ll be immediately eligible for Medicare. However, if your spouse was on your employer’s health plan, he or she will have to either stay on that  employer’s plan for 18 months (through COBRA) or get private insurance either on or off the health insurance exchange.  Just be aware that you could be looking at a huge jump in monthly health insurance premiums!
  • Higher Income Benefits For Your Spouse – Continuing with our example, let’s say by taking your Social Security benefits at age 65 your wife or husband’s spousal benefits would be $650. By waiting until your Full Retirement Age (age 66) – your spouse’s benefits would jump to $1,075.   By waiting until your FRA, your spouse will get half of your income benefits. Taking benefits earlier than age 66 likewise reduces spousal benefits.
  • Higher Income For Your Surviving Spouse – The longer you wait to claim benefits, the larger your spouse’s benefit will be and if you pass away before him or her, the larger your surviving spouse’s benefits will be.

5. How Do I Get the Most Social Security Income Possible & What’s the Best Age to Start Taking Benefits?

There are a number of Social Security benefit claiming strategies available that will help you and your spouse make the best decision, and the bottom line is there’s no substitute for a thorough benefit maximization analysis based on your unique situation.  So to help you get the maximum income benefits you’re entitled to, simply CLICK HERE to learn how to get your own, customized Social Security benefit analysis.

Securities and advisory services offered through Ausdal Financial Partners, Inc.  Member FINRA/SIPC 5187 Utica Ridge Road Davenport, IA 52807    563-326-2064  www.ausdal.com.  Public Retirement Planners, LLC and Ausdal Financial Partners, Inc. are separately owned and operated.

 

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