What Is The Best Age To Start Collecting Social Security Benefits?
Published May 1, 2012
Unfortunately, there is no easy answer when it comes to choosing the right age to start collecting your Social Security benefits. There are several factors that come into play to affect each individual’s decision on the matter. In addition, older adults also have to think about how the total amount of their benefits could change according to the age at which the benefits are first collected. This article will walk you through a few of the key considerations that you might want to think about before choosing when to collect your Social Security benefits.
How Your Benefits Are Affected By When You Start Collecting Them
The most essential thing to understand about Social Security benefits is that the dollar amount that you receive each month and the total length of time that you will receive payments is directly affected by when you begin collecting your benefits. Consider the following examples:
- John’s full retirement age is 66. At that time, his monthly Social Security payment will be $1,000. However, he decides to start receiving his payments at age 62. Since he will receive payments over a longer period of time by starting them earlier, his monthly benefit drops to $750.
- Sue’s full retirement age is 66 as well, and her monthly benefits at that age will be $1,000. She decides to put off receiving her benefits until age 70. This means that her monthly benefits will rise to $1,320 as a result of receiving the payments later on.
The lesson from these two examples is that, in general, those who put off receiving their Social Security benefits until after retirement receive more money overall. This is due to delayed retirement credits which are awarded to those who postpone receiving their benefits past their full retirement age.
Since Social Security benefits last as long as you live, it may be in your best interest to put off receiving benefits if you can so that you receive a higher payment for longer. According to CNN Money, delaying your payout as long as possible pays off as long as you make it to age 77. This allows for the delay in payments to be made up for with higher payments over time.
Weighing Your Options
The toughest part about choosing the age at which you want to start getting Social Security benefits is taking into account all of the different factors which may be at stake. The following are all matters which need to be considered before making a decision about when to start collecting your benefits:
- Life Expectancy: Some individuals believe that receiving benefits earlier is better since they will be receiving money for more years. However, if you put off collecting your benefits and you live past your mid-70s, the amount of Social Security benefits that you receive will be significantly greater than if you had opted for the early payout. According to Social Security Online, about one out of every four 65-year-olds today will live past age 90. If your family members have lived into their 80s or 90s, it may be better to delay receiving benefits since you will need the extra money more in your later years.
- Health: Considering your health is one of the top priorities when deciding the right age to start getting Social Security benefits. Those with poor health may want the money sooner to help pay medical expenses or to start saving money to help loved ones after they are gone.
- Health Insurance: Keep in mind that retiring early to receive Social Security benefits may mean that you are losing your employer provided health insurance. Since most individuals are not covered by Medicare until age 65, it’s critical to think about how you will pay for health insurance or medical costs if you do take Social Security benefits early. Even if you are delaying payments and plan to continue working, you should still sign up for Medicare three months before you reach age 65 to avoid delayed coverage and higher premiums.
- Work: Once you reach your full retirement age, you can still work and receive Social Security benefits. According to the Social Security Administration, work earnings in or after the month you reach your full retirement age will not lower your Social Security benefits.
- Family Members: Be sure to consider how your decision about when to start collecting Social Security benefits will affect your family. If you die before your spouse, they may be eligible to receive a survivor benefit. Children under the age of 18 or that have a disability may also be eligible for these benefits. If you begin receiving Social Security benefits early, your spouse and children may not receive a full benefit.
There are a number of important things that factor into the decision about when to start receiving Social Security benefits. For more information, visit www.ssa.gov and talk to a financial advisor to figure out when is the best age for you to start collecting these benefits.
Last Updated: May 1, 2012