The
age that you begin Social Security benefits has a huge impact on the size of
your monthly benefit payments. By the age of 62, you will be eligible to claim
Social Security benefits. However, you will be eligible for 100% of your
retirement benefits at the age of 65. Your monthly benefit amount will be
permanently reduced if you start any earlier, and permanently increased if you
wait up until age 70. For instance, if you begin your retirement benefits at
age 70, the monthly benefit will be 32% larger than if you began at full
retirement age.
What
is the best age to start your retirement benefits?
Are you still working? Some people, especially construction
workers and other physical laborers, are less able to handle work at 62, even
though they don't qualify for disability. They may be good candidates for early
retirement.
However,
if you're still able-bodied and interested in working, you might want to avoid
claiming early retirement benefits. If you're earning a high salary, you'll
miss the opportunity to boost your Social Security payment amount.
How's your health? If you're convinced - either by
genetics, research, or the amount of time you spend in doctors' offices -- that
you'll have a shorter lifespan than your peers, it doesn't make much sense to
delay your retirement benefits although your benefit payments get permanently
reduced.
What's your break-even point? If you had a good
idea of when you were to die, you could compare your total benefit payments
under all three common scenarios - age 62, full retirement age, and age 70.
Financial planners prefer to calculate your break-even point -- that's the age
at which two of your total lifetime benefit amounts become equal to each other.
If
you expect to live longer than average, it would be smart to delay the start of
benefits up to age 70 if possible, so that a larger monthly benefit is received
for the rest of your life. That extra money might well be needed in your later
years, particularly if you are running low on other retirement resources.
What will you do with the money? If you plan to
invest the money, your investments would need to earn more than 7% annually to
equal what you would make by delaying benefits until full retirement age.
Do you have dependents? Your family's dependents and survivors’
benefits may be reduced if you claim early retirement benefits.
Deciding when to start your Social Security
benefits can be complex. To learn more about retirement age options and
retirement planning, please email info@gkmtax.com. 
