Marketplace Your Financial Future
Social Security Benefits
When is the Best Time to Start Taking Them? Carol Ringrose Alexander, CFP®, AIF®, CDFA™
T
he date you start taking Social Security benefits affects the amount of benefits you will receive. If you decide to start benefits before your full retirement age, your benefit will be permanently reduced. To determine when to start taking benefits, consider several factors:
Carol Ringrose Alexander
Are you still working? If you plan to continue working, there are limits on how much you can earn each year between age 62 and full retirement age while still getting all your benefits. If your earnings will be high, you may decide to wait until full retirement age to start your Social Security benefits. Once you reach full retirement age, there is no longer any limit on how much you can earn. How long do you expect to live? A man who turned 65 in 2007 can expect to live another 17.5 years. A woman who turned 65 the same year can expect to live another 19.8 years. About one out of every four 65-year-olds today will live past age 90. One out of 10 will live past age 95. Do you come from a long-lived family? If your parents and grandparents lived into their 80s or 90s and you have every reason to believe you will too, you may decide to delay starting your benefits until full retirement age or later. If you come from a long-lived family, you may need the extra money more in later years, particularly if you outlive other pensions or annuities that have limits on how long they are paid. If you do not expect to have a long life, you may choose to start receiving retirement benefits earlier. How is your health? If you are not in good health, you may decide to start receiving your benefits earlier. Will you still have health insurance? If you stop working, not only will you lose your paycheck, but you may also lose health insurance provided by your employer. Although there are exceptions, most people will not be covered by Medicare until they reach age 65. If you are married and your spouse is employed, you may be able to switch to his or her health insurance. Do you have other income to support you if you decide to delay taking your benefits? If you don’t need your benefits immediately, you may decide to wait beyond full retirement age and take advantage of the delayed retirement credits, or choose early retirement and increase the value of your benefits by investing them instead of spending them. Carol Alexander is a financial advisor with Retirement Investment Advisors, which has been recognized numerous times as one of the top fee-only investment advisory firms in the nation. Before becoming a financial advisor, Carol attained the highest certification in the field of fundraising – the Advanced Certified Fundraising Executive – from the Association of Fundraising Professionals.