When you should start getting Social Security benefits is a very important financial decision that depends on your health, your plans for retirement, and your long-term financial goals.
You can start getting benefits as early as age 62, but your monthly payments will be higher if you wait until you reach full retirement age or even later.
Knowing the pros and cons and how they might affect your overall retirement plan can help you make the best decision for your money.
The rules around Social Security retirement age
People can start getting Social Security benefits at age 62, but the monthly payment will be permanently lowered. There are different FRAs for different birth years, but the average FRA is between 66 and 67.
If you wait until after your FRA, your benefits will go up. At age 70, you will get the most money each month. You can not get your Social Security benefits before age 62.
“One of the biggest worries people have about retirement is running out of money, so putting off getting Social Security benefits makes a lot more sense than it did in the past.”
Ben Storey, director of Retirement Research and Insights at Bank of America, says, “Putting off taking benefits can help protect you against the risk of living too long.”
Why you should postpone collecting your benefits
For many people, the choice to delay getting their Social Security benefits is not an option. because of the need for money or other factors in their lives.
People who are having trouble with money right now may need to start getting their benefits sooner, even if it means accepting a lower monthly amount.
Delaying benefits can make monthly payments bigger. Many people who get Social Security and do not have any other ways to invest their money can not put it off.
Putting off getting your benefits, on the other hand, is the best thing you can do to get the most money each month. “Let us say you are 66 years old and your Social Security benefit is $10,000 a year.
If you wait a year to claim it, you will not get the $10,000 the first year, but when you turn 67 the next year, you will get $10,800, which is 8% more. This amount will be adjusted for inflation every year for the rest of your life, says Storey.
Financial planning is the key to ensuring the longevity of your retirement
A lot of Americans who get Social Security depend on it to get them through retirement. However, the government always tells people that Social Security should not be their only plan for retirement.
Experts say that to make sure a safer and more comfortable retirement, you should have a variety of income sources, such as personal savings, pensions, and investments.
People who depend only on Social Security may not be able to handle inflation and rising costs of living, so it is important to plan for extra money.
Getting ready for retirement as soon as possible is one of the most important things you can do when you start working. When you start saving and investing early, your money has more time to grow through interest that builds on itself.
This can help you save a lot more for retirement. Over many years, even small, regular contributions can add up and help you build a nest egg that will support you when you retire.
Planning ahead of time also gives you the freedom to change your plans as your goals and finances change.
How you plan to spend your retirement years will ultimately affect your choice of whether to wait to claim your benefits.
In retirement, some of us will have more costs than others, especially those whose health care costs are higher. For some, it would make more sense to claim early than to wait.
