When Should You Start Collecting Social Security?

August 02nd @ 10:22 am

These questions can help you determine if you should start collecting your social security benefits.

Social Security is one of the most recognized income sources Americans receive after retirement. Well over 50 million people rely on these benefits for part or all of their income during their retirement years. If you’re a senior nearing retirement, you may question when you should start collecting Social Security benefits. Continue reading as Royal Oak Financial Group breaks down the key components for determining when you should collect Social Security.

How Early Should Your Start Collecting Social Security Benefits?

Contrary to many Social Security myths, there is no set age at which you have to start claiming your benefits. You can, however, start claiming once you reach the age of 62. However, most financial advisors will recommend you wait until you reach your full retirement age (FRA), which falls somewhere between 65 and 67.

The Social Security Administration (SSA) determines your full retirement age based on the year you were born. If you’re unsure of how to calculate your FRA, there are many helpful online retirement age calculators available. Ultimately, your decision to start collecting is a personal choice based on individual circumstances. These include physical well-being, marital status, financial needs, and job satisfaction. 

How Social Security Benefits are Calculated

Before deciding when to claim, make sure you understand how your benefits are calculated. In addition to the compilation of your entire income over the years, your full monthly Social Security benefit amount boils down to your birth year and the exact age you start claiming. 

Generally speaking, the longer you can afford to hold off until the age of 70, the higher your monthly benefit will be. However, delaying your benefits isn’t always best in the long run. Consider your plans, health, and goals, including your family life expectancy, tax rate, prospective investment options, and any ramifications that could impact your health insurance coverage.

Determine Your Ideal Time to Start Claiming

If you follow through with expert recommendations, you’ll likely wait until after your FRA to start claiming your benefits. However, this isn’t always the most convenient time, and many individuals retire well before reaching FRA.

If you suffer from health conditions or rely on extra monthly income to make ends meet, you may be better off taking Social Security as soon as 62. In some cases, you may find that you’re eligible to accept an early retirement offer from your employer. The questions below can help you get started determining the right approach for you.

  1. How Long Do You Intend to Work?

    Your current occupation could directly impact your Social Security collection date. If you have a labor-intensive job, it may be challenging to work beyond the age of 62. If this is the case for you, then it’s probably in your best interest to collect your benefits sooner rather than later.

    On the other hand, if you enjoy working and have no intention of taking early retirement, you’ll most likely be better off waiting and claiming your benefits at a later point in time. Keep in mind that once you begin claiming benefits, you cannot recalculate your benefit amount if you’re still gaining contributions from your employer. 

  2. Do You Have Any Health Concerns?

    Maximizing Social Security benefits also comes down to your estimated lifespan. Consider your current state of well-being and the average life expectancy of your family members. If you’re in good health and foresee yourself living for the next several decades, it may be beneficial to postpone benefit claims. If not, you may want to collect your benefits as soon as possible.

  3. What’s Your Break-Even Age?

    There are pros and cons to claiming your Social Security sooner or later on in life. Taking it earlier minimizes your benefit payments, but you’ll continue getting monthly checks for a longer duration. Contrary to that, claiming your benefits later will reduce the number of checks you receive, but result in larger Social Security payments.

    The key lies in figuring out your break-even age. This is the age at which you earn more by waiting rather than claiming your Social Security benefits earlier. Generally, you’ll break even somewhere between the ages of 77 and 83. It’s tricky to determine, so working with a trusted fiduciary can help.

It’s crucial to stay diligent about your personal finance as you prepare for retirement. With so much retirement planning information, it can be hard to know what’s right for you. Proper planning and make or break your retirement plans, so consider working with a financial advisor during this period. Contact the professionals at Royal Oak Financial Group for peace of mind and personal service every step of the way. 


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