Timing your Social Security Benefits

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Timing Your Social Security Benefits: A Critical Retirement Decision

For most Americans, Social Security is the only source of income that is guaranteed for life. Your decision on when to begin receiving these benefits is one of the most significant financial choices you will make, potentially impacting your total lifetime income by tens of thousands of dollars. Understanding your options is the first step toward making the right choice for your unique situation.

The Three Key Claiming Ages

There are three main milestones to consider when deciding when to start your benefits:

  • Age 62 (The Earliest Start): You can begin receiving benefits as early as age 62, but they will be permanently reduced by up to 30%. If you are still working, your benefits will also be temporarily reduced if you earn over the annual limit. This option is typically only advisable for those who have significant health issues or a critical need for the income.
  • Full Retirement Age (FRA): This is the age at which you are entitled to 100% of your earned benefit. For many years it was 66, but for anyone born in 1960 or later, the Full Retirement Age is now 67. The earnings limit no longer applies once you reach your FRA.
  • Age 70 (The Maximum Benefit): For every year you delay claiming past your FRA, your benefit increases by 8%. By waiting until age 70, you maximize your monthly payment for the rest of your life. There is no financial advantage to waiting beyond age 70.

Making the Right Choice for You

Choosing when to withdraw is a personal decision that should be based on a careful consideration of your health, life expectancy, and overall financial picture. While no one can predict the future, a general rule is that if you expect to live a long and healthy life, delaying your benefits is often the most profitable strategy.

Your Social Security claiming strategy is a critical component of your overall retirement and estate plan. Call our office at (919) 256-7000 to schedule a consultation.