GOLDEN VALLEY, Minn. - One of the few things you can control about Social Security is when to start collecting it. Should you take it when you become eligible at age 62, wait until "normal" retirement age or consider delaying your benefits past normal retirement age?
To help you make this decision, consider that, on average, Americans are living longer than ever before. Clearly, the longer you expect to live, the more sense it makes to delay taking Social Security. But of course, each person's circumstances and needs are different. Dan Ament, Financial Advisor with Morgan Stanley Smith Barney joined us on KARE 11 Sunrise to discuss how timing can affect the benefits you receive.
Early Benefits: The soonest you can collect Social Security is age 62. But taking payments at 62 will result in a permanently reduced benefit, ranging from a 20% reduction for people born in 1937 up to 30% for those born in 1960 or later. You may want to consider early benefits if you need income but prefer to leave your portfolio intact, or if you intend to invest the benefits to try to earn a more competitive return (though there's no guarantee you will do so).
Full Benefits: Eligibility for full Social Security benefits varies according to the year you were born. Depending on how long you worked and how much you earned over your lifetime, the maximum benefit you could collect at normal retirement age of 66 is $2,512 according to the Social Security Administration. Consider waiting for full benefits if you plan to work until age 66, if you want to ensure a larger survivor's benefit for your spouse or if family history and good health may lead to an above-average life expectancy.
Delayed Benefits: If you continue working beyond your normal retirement age, you will be eligible to collect a permanently increased Social Security benefit when you do retire. Approximately 8% more per year will be added automatically to the permanent benefit amount for every year you wait. Delaying benefits past age 70 will generally add nothing more to your monthly benefit.
Bottom Line? Your decision is a personal one. Would it be better for you to begin receiving benefits early with a smaller monthly amount or wait for a larger monthly payment later that you may not receive as long? The answer is highly personal and depends on a number of factors, such as your current cash needs, your health and family longevity, whether you plan to work in retirement, whether you have other retirement income sources, your anticipated future financial needs and obligations, and, of course, the amount of your future Social Security benefit.
Sources and excerpts:
Social Security Administration - When to start receiving retirement benefits
WSJ.com - How to boost Social Security Checks - June 30, 2012
MSN Money - Want your Social Security early?
SmartMoney - Strategies to max out Social Security Benefits
SmartMoney - How to outsmart Social Security
Dan Ament is a Financial Advisor with The Ament Group at Morgan Stanley Smith Barney located in Wayzata, MN and may be reached at 952-475-4302 or email@example.com.
For more information about The Ament Group and access to capital market research click: http://fa.smithbarney.com/amentgroup/