Starting SSA retirement – now or later?

Q: I had expected to retire and start my Social Security next year at age 64 but I’ve been reading articles urging people to wait until reaching at least their SSA full retirement age, for me age 66, before starting benefits. What is best?

 A: One aspect of this question shows how Social Security has influenced retirement thinking. Prior to the Social Security Act legislation of 1935, few people were able to retire. According to the history section of the SSA website, only about five percent of the elderly received a retirement pension in 1932. People generally worked as long as they physically could do so. The concept of retirement, whether at 62 or a different age, is thanks in part to Social Security.

There is no one answer for when you should start Social Security retirement related benefits. This is a very individual decision, based on your own personal family and financial circumstances. 

If you live to the average life expectancy for your age, you will receive about the same amount in lifetime Social Security retirement benefits no matter whether you start receiving benefits at age 62, full retirement age, age 70 or any age in between. However, monthly benefit amounts can differ substantially based on when you start. Basically, you can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of time. Consider more than just the amount in your planning.

I have also seen articles suggesting that people delay starting SSA retirement benefits in order to receive a higher monthly amount. Benefit amounts change monthly in relation to your full retirement age (FRA).  Using your FRA of 66, which includes birth years of 1943-1954, if you start receiving retirement Social Security retirement at age 62, you receive 75 percent of your full retirement age amount because you will be getting benefits for an additional 48 months before FRA. Waiting until age 65, you get 93.3 percent of your FRA amount because you will be getting benefits for an additional 12 months. For an age 66 FRA, monthly percentages for age 62 – 66 are here. If delaying benefits past FRA, up to age 70 monthly increases equal 8 percent annually. Some articles encouraging waiting that I’ve seen mention that this is a larger rate of return than many investments currently offer.

There is no one answer for when you should start Social Security retirement related benefits. Next time I will discuss some topics for your consideration.

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