When and how to take Social Security benefits is not an easy decision to make. There are so many factors to take into consideration. If you’re already 62 and out of work, or worried about being laid off, it may be tempting – or even necessary – to take early Social Security.
In any case, the choice of when to enroll requires good planning and thoughtful decision-making. It comes down to considering whether collecting benefits before full retirement age is worth the thousands of dollars in lifetime benefits that you – and perhaps your spouse – will lose.
While the benefits can be claimed at age 62, each year they are delayed up to age 70 increases the monthly lifetime benefit. It may make sense to tap pensions, 401Ks, IRAs and other investments before taking early Social Security.
Key Factors to Consider
There are many variables to consider before making a decision on whether to take early Social Security. Here are 3 key ones:
Employment status – If you intend to continue working, there is an annual earnings limit that will reduce your social security benefits or cause a portion to be taxed. This also applies if you are married and your spouse works and you file taxes jointly.
Impact of Taxes – If you have additional sources of income other than Social Security, there may be tax consequences that should be factored into your decision.
Life Expectancy – Generally speaking, the longer your average life expectancy, the longer you should wait to begin drawing on Social Security. If you are married and your spouse will receive social security based on your benefit, lower benefits you take at age 62 will mean that a surviving spouse will receive a reduced benefit throughout their lifetime as well.
Making Sense of Your Options – Because the age at which you take Social Security has long-term implications, it makes sense to explore all the variables with a trusted financial advisor who has access to sophisticated computer software that will calculate the optimum time to begin collecting benefits, and can present several scenarios which show the amount you might expect over your lifetime, depending on when you begin.
Raskob Kambourian Financial Advisors is an independent, fee-only comprehensive financial advisory firm registered with the Securities and Exchange Commission. We offer expertise, competitive pricing, and personalized financial services to meet your “Life Planning” needs.