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One of the pivotal decisions individuals face in retirement planning revolves around when to start taking Social Security benefits. This decision carries significant weight, as it directly impacts your financial income during retirement. Before delving into the personal factors influencing this choice, let’s explore how benefit amounts vary based on the age at which you commence receiving Social Security.
Monthly Benefit Amounts Based on the Age that Benefits Begin¹
| Age | Benefit Amount |
|---|---|
| 62 | $1,050.00 |
| 63 | $1,125.00 |
| 64 | $1,200.00 |
| 65 | $1,300.50 |
| 66 | $1,399.50 |
| 67 | $1,500.00 |
| 68 | $1,620.00 |
| 69 | $1,740.00 |
| 70 | $1,860.00 |
(*Assuming a benefit amount of $1,500 at the full retirement age of 67 months for those born after 1960.)
While the decision might seem straightforward at first glance—weighing the lifetime value of early benefits against higher benefits—the complexity arises due to tax considerations, spousal benefit coordination, and Social Security’s unique lifetime income guarantee under current law.² Here are three key considerations to help guide your decision-making process:
1. Do you need the money?
If circumstances such as health decline or job loss lead to an early retirement, and you need the scheduled Social Security income, taking benefits early may be a necessity.
2. Consider the needs of Your spouse
For couples relying on Social Security income, early benefits may impact survivor benefits significantly. Considering longer life expectancies for women, planning for a surviving spouse is crucial.
3. Are You healthy?
Balancing the risk of running out of money in retirement requires assessing your current health. While waiting until full retirement age ensures a full benefit for a longer period, health considerations may influence an earlier start.
4. Do you have earned income?
If you have income from consulting, work, or deferred compensation, it may be advantageous to wait to start taking your benefit to factor in the tax implication of taking your benefit vs benefiting from the increased payment.
At Guide My Finances, when creating a financial plan, we always consider the optimal time to take social security. Wondering when the right time is for you? We can help!
