Breaking Down the Math
Imagine that you must sit down and take a math test. This test only has one question on it, but depending on what variables you use, the question could result in approximately 108 different answers.
That is what it is like to figure out when to take Social Security. There are 108 months between the ages of 62 and 70, and taking Social Security on any of those months will give you a different amount to collect for the remainder of your life.
To even begin to figure out this math problem, the first thing you need to know is your full retirement age (FRA). According to the Social Security Administration, here is the answer:
Now, just because you can take Social Security at age 62 doesn’t mean you should. There is a permanent reduction in benefits. But if you wait until age 70, your benefits will have a permanent increase. Per the Social Security Administration, those reductions or increases look like this:
To recap: if your full retirement age is 66 and you take your benefits at age 62, you will only receive 75% of your benefits. That is a 25% permanent reduction for life. Conversely, if your full retirement age is 66 and you take your benefits at age 70, you receive 132% of your benefits for life.
Considering All the Factors
Okay, so that seems very straightforward. Wait until you’re 70 to get the most bang for your buck, right? The answer to that is maybe. There are a lot of other factors that go into making this decision, including:
- How long are you going to live?
- How long did your parents/grandparents live?
- How healthy are you?
- Are you going to work from the age of 62 to your full retirement age?
- Do you need Social Security for income, or do you have other sources to use until your full retirement age?
- Are you married?
- Are you divorced, but you were married to your ex for at least 10 years?
- Do you have to pay taxes on your Social Security? Depending on your income level, you might have to—is your retirement income plan taking that into account?
Confused yet? Let’s go back to the math test. You realize it’s a word problem. But unlike the whole train A left the station at X time type of question, you are faced with the equally daunting task of choosing which of the 108 individual options will produce the maximum income for you for life given a variety of different variables to consider. And if you are married, which of those options will keep your spouse comfortable in the lifestyle they’re accustomed to when you’re gone?
Unfortunately, as we get older, the math does not get easier. If you have questions on when and how you should take your Social Security benefits, contact us, and we can review your situation and provide a complimentary Social Security maximization report tailored specifically to you.
The Journey Financial Group is not affiliated with or endorsed by the Social Security Administration or any government agency. This content is for informational purposes only and should not be used to make any financial decisions.
Ready for your complimentary consultation?
Fill out the form below and we will be in touch shortly!
"*" indicates required fields
