If you qualify for Social Security, you can take it as early as age 62 or delay it as late as age 70. There are pros and cons for each option, and the optimal choice will be unique to you. If you decide that waiting is the right decision, needing the money could prevent you from following that choice.
Full Answer
When can you start receiving Social Security retirement benefits?
You can start receiving your Social Security retirement benefits as early as age 62. However, you are entitled to full benefits when you reach your full retirement age.
What is Social Security's rate of return?
Social Security's rate of return is the rate of return on payroll taxes that would buy an annuity equal in value to the Social Security benefits payments.
What happens if I take my Social Security benefits early?
If you start receiving benefits early, your benefits are reduced a small percent for each month before your full retirement age. To find out how much your benefit will be reduced if you begin receiving benefits from age 62 up to your full retirement age, use the chart below and select your year of birth.
What is the 8% annual return on Social Security disability benefits?
As you can see above, the actual changes in monthly payments don't exactly follow a straight line. The concept of the 8% annual return comes from the fact that for every year beyond 66 that you wait to take benefits, your benefit goes up by 8% of your primary insurance amount.
When should I take Social Security to maximize my benefits?
If you start receiving retirement benefits at age:67, you'll get 108 percent of the monthly benefit because you delayed getting benefits for 12 months.70, you'll get 132 percent of the monthly benefit because you delayed getting benefits for 48 months.
Should I take SS early and invest it?
You Expect Your Investments To Grow Faster Than the Increased Benefit. If you're the next Warren Buffet, it's possible you could do better taking Social Security early and investing the money than you could by waiting to take a larger benefit later.
When should I start collecting Social Security break even analysis?
At around age 78 and 8 months, you reach the break-even point, when your cumulative benefits from claiming at 67 surpass those you'd get by taking retirement at 62. You can use a similar calculation to determine the break-even age for taking your maximum benefit at age 70 — in this example, $1,860 a month.
When should I start taking Social Security looming 60 somethings wonder?
Definitely start taking it at age 70. If possible, avoid taking it at 62—and we've laid out the conditions where filing that early would make sense: if you're in poor health, if you have a higher-earning spouse who can delay filing, or if you simply need the benefit as soon as possible to cover your living expenses.
Is it better to take Social Security early or use savings?
Assuming your tax-advantaged retirement savings aren't invested as aggressively as they may have been during your earlier years, you're probably better off spending down savings while letting your Social Security benefit continue to grow.
Is it better to take Social Security early or later?
You may be eligible to collect Social Security as early as 62, but waiting until age 70 yields greater benefits for most people.
Is it better to take Social Security at 62 or 67?
The short answer is yes. Retirees who begin collecting Social Security at 62 instead of at the full retirement age (67 for those born in 1960 or later) can expect their monthly benefits to be 30% lower. So, delaying claiming until 67 will result in a larger monthly check.
How much Social Security will I get if I make $75000 a year?
How much you can expect to get from Social Security if you make $75,000 a year. The first monthly Social Security check was cashed in 1940 for a grand total of about $23. Fast forward to 2019, and the average retired worker gets almost $1,500 a month from Social Security.
Should I take my Social Security at 66 or 70?
As you undoubtedly already are well aware, most financial planners recommend that—so long as you can afford to do so—you should wait until age 70 to begin receiving your Social Security benefits. Your monthly payment in such an event will be 32% higher than if you begin receiving benefits at age 66.
What is the $16 728 Social Security secret?
1:266:46My Review: Motley Fool's $16,728 Social Security Bonus - YouTubeYouTubeStart of suggested clipEnd of suggested clipIf you've read any of their articles you've probably seen this it says the sixteen thousand sevenMoreIf you've read any of their articles you've probably seen this it says the sixteen thousand seven hundred and twenty eight dollar social security bonus most retirees completely overlook.
What percentage of retirees have a million dollars?
The remaining respondents calculated that they need less than $500,000. But how many people have $1,000,000 in savings for retirement? Well, according to a report by United Income, one out of six retirees have $1 million.
Why retiring at 62 is a good idea?
Probably the biggest indicator that it's really ok to retire early is that your debts are paid off, or they're very close to it. Debt-free living, financial freedom, or whichever way you choose to refer it, means you've fulfilled all or most of your obligations, and you'll be under much less strain in the years ahead.
How long do you have to wait to get Medicare if you are 65?
The Social Security Administration (SSA) also cautions that even if you delay receiving Social Security benefits until after age 65, you might still need to apply for Medicare benefits within three months of turning 65 to avoid paying higher premiums for life for Medicare Part B and Part D.
How much is a month of benefits at 62?
If, for example, you’d get $1,500 a month starting at age 62 or $2,000 a month starting at age 66, you will have received roughly the same amount in total benefits by age 77 or so. At that point the higher monthly benefits you’d get as a result of waiting will begin to pay off.
How much extra insurance do you get at 70?
If you wait until you’re 70 to start claiming benefits, you’ll get an extra 8% per year , or, in total, 132% of your primary insurance amount ($2,640 per month in the example above) for the rest of your life.
How much is my unemployment check at 62?
In other words, you’ll get 25% less per month, and your check will be $1,500. 1 .
Can a spouse get Social Security if they don't work?
Spouses who don’t qualify for their own Social Security. Spouses who didn’t work at a paid job or didn’t earn enough credits to qualify for Social Security on their own are eligible to receive benefits starting at age 62 based on their spouse’s record.
Do marginal tax rates affect Social Security?
At today’s marginal tax rates, they may not have much of an impact on most people. Still, tax rates and income thresholds can change, so it’s worth remembering that you will lose less of your Social Security to taxes if you are in a lower marginal tax bracket when you begin to collect.
Is Social Security taxable?
Your Social Security benefits may be partially taxable if your combined income exceeds certain thresholds. Regardless of how much you make, the first 15% of your benefits are not taxed. 10
What is Social Security Benefits?
Social Security benefits are designed to make payments throughout your lifetime. In order to reflect the impact of claiming earlier or later than full retirement age, Social Security provides for reductions or additions to the standard primary insurance amount that determines your monthly benefit.
What happens if you retire at 62?
If you retire at age 62, you'll receive 25% less than if you had waited until age 66. Conversely, if you retire at age 70, your monthly check will be 32% more than your full retirement age benefit. Source: SSA. As you can see above, the actual changes in monthly payments don't exactly follow a straight line. The concept of the 8% annual return ...
What is the most important source of income for retired Americans?
Social Security benefits are one of the most important sources of income for retired Americans, and deciding when to start taking monthly checks from Social Security is a key element of your financial planning in retirement.
Can you get back to even after delaying your benefits?
During the period in which you could have been getting benefits but chose not to, your return from delaying is actually negative. Once you start receiving monthly payments, the higher amount helps you catch up gradually, but it still takes years to get back to even.
Is Social Security delaying returns guaranteed?
The returns from delaying Social Security are anything but "guaranteed," as Kitces found out.
Is it true that Social Security will give you a bigger monthly payment?
Although it's true that waiting beyond age 62 to take Social Security will give you bigger monthly payments, it's highly misleading to call this a "return" in the traditional sense, as it's not as though those higher payments don't come with a cost. Let's take a closer look at this 8% return myth and why it hasn't stopped many American retirees ...
Is there a return on Social Security delaying?
The real return on delaying Social Security. A true assessment of the returns of delaying Social Security needs to include not just the higher payments you receive, but also the time value of the benefits you give up. Last year, well-known financial planner Michael Kitces did his own analysis of the return of delaying Social Security.
Is Social Security a good investment?
The rate of return earned on what is paid into our Social Security accounts is actually quite good. It is especially good when one takes into account that these are investments in safe assets, and thus that the proper comparison should be to the returns on other safe assets, not risky ones. Yet critics of Social Security, mostly those who believe it should be shut down in its current form with some sort of savings plan invested through the financial markets (such as a 401 (k) plan) substituted for it, often assert that the returns earned on the pension savings in Social Security are abysmally poor.
Will Social Security be depleted in 2034?
But as most know, at current tax and benefit rates the Social Security Trust Fund is projected to be depleted by about 2034 according to current estimates. The reason is that life expectancies are now longer (which is a good thing), but inadequate adjustments have been made in Social Security tax rates to allow for pay-outs which will now need to cover longer lifetimes. The problem has been gridlock in Washington, where an important faction of politicians opposed to Social Security are able to block any decision on how to pay for longer life expectancies.
Is Social Security better than 401(k)?
But the calculations here indicate that for someone with median earnings, and still even in the extreme case of someone with very high earnings (where a degree of progressivity in the system will reduce the returns), the rates of return earned on what is paid into and then taken out of the Social Security system are actually quite good. They generally are better than what is earned in a typical 401 (k) account (after fees), and indeed often better than what would earn in a pure equity investment of the S&P500 index (and without the risk and volatility of such an investment).
Can Social Security benefits change secularly?
Finally, the Social Security's site makes no secret of the fact that that promised Social Security benefits could change secularly. ("Your estimated benefits are based on current law. The law governing benefit amounts may change. Congress has made changes to the law in the past and can do so at any time.")
Is the Social Security calculator good?
The Social Security Administration's calculator is a good first step when contemplating different filing decisions, especially because it harnesses your own earnings history. But it's also worthwhile to take into account even more elements of your own situation, especially if you're part of a married couple.
What are the advantages and disadvantages of taking your retirement benefits before your full retirement age?
The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit will be reduced. Each person's situation is different.
What happens if you delay your retirement?
If you delay your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your monthly benefit. That there are other things to consider when making the decision about when to begin receiving your retirement benefits.
Is it better to collect your retirement benefits before retirement?
There are advantages and disadvantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit will be reduced. Each person's situation is different.