Most people look forward to retirement. Each person must decide when the best time is to start retirement because every person’s situation will be different. You need to take the size of your social security benefits into consideration in order to determine the best time to claim social security.
You Can Start Social Security at Age 62
If you have been working for the required number of years to get social security, you can start drawing on it when you’re 62. Before taking it at that age, you need to be aware that the size of the payments you are eligible for continues to increase – if you wait longer.
Social Security (SS) benefits increase by a certain percentage of what you are entitled to – based on how much you made when working. If you were born between 1943 and 1954, you cannot receive 100 percent of your benefits until you are 66.. People born after 1954 will have to wait one or more months after they turn 66.
Social Security Benefits Keep Increasing to Age 70
Waiting longer than your 66th birthday means that you continue to get more each month. The percentage increase goes up about 8% each year. If you wait until you are 70 to start drawing your SS benefits, you will see an increase of 132%. This amount will not increase beyond that age – even if you continue to wait before claiming it.
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How Delaying Your Benefits May Help You
As you think about retiring and make plans for it, it is important to understand that the more benefits you get from Social Security the less you need in savings. Waiting longer may mean a more comfortable retirement for you, enabling you to be able to do more of the things you want to do after you quit working.
If you plan on continuing to work, you will need to work fewer hours after you start drawing your SS benefits. Combined with a part-time salary, the additional income above your SS benefits could help you to pay off any remaining bills and let you keep on living at a higher level.
You also need to consider that you will probably be living longer. Receiving a larger amount per month will mean a lot more as you get older. If you take SS out when you are 62, and at full age, you would be entitled to $1,000 per month, you would only get $750 per month. If you waited until you were 70, you would get $1,320 each month. Think about which amount you would prefer.
Remember Medicare Costs
If you take Medicare – as most people do – it is going to come out of your SS benefits. You want to remember this when you calculate how much income you will need each month once you retire. This cost goes up every so often due to inflation.
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One More Consideration
The Social Security Administration has announced that it is not taking in as much as it needs to be able to sustain its payments to the expected number of retirees. They predict that there could be a drop of about 20% in payments as soon as 2034. That is just 13 years away. If you are 65 now, it means that you will only be a young 78. However, many people live to be much older.
Waiting until you are 70 – or at least 66 – makes a lot of sense when considering the overall benefits. Plan carefully what your needs will be before your retirement to determine the best time to claim social security.