We’re in the Money: When Should I Start My Social Security Retirement Checks?

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By Alex Jones

The decision about when to claim your benefits is a significant one. Americans are living and working longer, and retiring later. Unfortunately, some of us haven’t saved much. According to the National Institute on Retirement Security, “the average working household has virtually no retirement savings.” You might need Social Security to stay afloat in old age.

More is Better:

The size of the Social Security check you’ll receive is the result of your earnings record and age when you start taking benefits. Your “full retirement age,” when you’ve earned 100 percent of those benefits, is sixty-six or sixty-seven, depending on when you were born. Collect early, before full retirement age, and you’ll pay a penalty – you’ll receive a smaller check.

Wait if You Can:

The choice of your start date locks in the size of your checks. Some grab Social Security as soon as they can. For widows and widowers, that’s age sixty. For everyone else, it’s sixty-two, which has been and still is the most popular age to start benefits, according to U.S. News & World Report.

That’s changing. According to the Social Security Administration, men and women who can claim retirement benefits at the earliest eligibility have declined drastically.

If you hold off filing until after full retirement, your checks earn a bonus of eight percent per year. The longer you wait, the bigger your benefit becomes, until age seventy. After seventy, there’s no benefit to waiting longer.

Waiting makes sense if you’re healthy and members of your family tend to live longer. A $2,000 benefit, for example, becomes $2,640 if your full retirement age is sixty-six and you wait four more years.

A quarter of today’s sixty-five-year-olds will live past ninety, according to the Social Security Administration. You may need those checks for a long time.

Trade-Offs:

Here’s a hypothetical example of the pros and cons for someone eligible for $750 per month at sixty-two who waits and claims benefits at seventy:
Pros:
• At seventy, your monthly checks are $1,320 to $1,560 more per month for life.
• After breaking even between age eighty and eighty-one, your total earnings are greater each year compared with taking benefits at sixty-two.
• At eighty-three, your total Social Security earnings are $16,920 more than if you’d begun at sixty-two; at eighty-five, you’ll have $30,600 more; and by ninety, you’ll have $64,800 more.

Cons:

• You wait longer to get checks.
• You get fewer checks overall.
• You lose money if you die before breaking even in roughly 10 1⁄2 years, or at age 80 1⁄2.

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