When is the right time for you to file for Social Security benefits? It’s a question that nearly every retiree faces. According to the Social Security Administration, almost 90 percent of all workers age 65 and over rely on Social Security income.1 That means Social Security is likely to play a role in your income strategy, no matter your retirement plans.
Of course, not all Social Security benefits are equal. Your benefit amount depends on your career earnings and how long you worked. More important, though, it depends largely on when you file for benefits.
You are eligible to file as early as age 62. However, your full retirement age (FRA) likely falls between your 66th and 67th birthdays. If you file before your FRA, you could see your benefits permanently reduced as much as 25 percent.2
You can increase your benefit by delaying your filing past your FRA. Social Security offers an 8 percent annual benefit increase for every year past your FRA that you delay your claim. You can delay to age 70. For example, if your FRA is 66 and you file at 70, you would earn four years of 8 percent credits, generating a permanent 32 percent increase in your benefit.3
What’s the right answer for you? Should you file early, late or at your FRA? Below are a few questions to ask yourself as you make this important decision:
Can you afford to wait?
This is perhaps the biggest question to consider. Obviously, you will receive a greater benefit if you wait to file. However, you may find it difficult to fund your lifestyle without income from Social Security.
Think about ways to generate income with Social Security benefits. For example, could you retire from your full-time career, but then work part time in a more flexible position as you wait to file? Could you scale back your budget, giving yourself flexibility to wait? Examine all possible options so you can delay your filing if at all possible.
How long do you expect to live in retirement?
Another important consideration is how long you will live in retirement. Obviously, you can’t predict with certainty when you will die. However, you may be in a position to make a reasonable estimate.
For example, maybe you have a chronic health issue that threatens your longevity. Maybe you’ve had a recent medical issue or received a diagnosis that leads you to believe you won’t live long in retirement. If so, it may be wise to file earlier rather than later. After all, there’s not much use to waiting if you believe you won’t live far into your 70s.
However, don’t make this assumption based just on family history. There have been significant advances in medical treatments over the past several decades. Just because your parents passed away relatively early in retirement doesn’t mean you will, too.
Do you need the money?
Finally, consider your current financial situation. It’s possible that you’ve been forced into early retirement and have few other options for income besides Social Security. For example, maybe you had to leave your career because of a disability or other physical ailment.
If so, you may have no choice but to file for Social Security. While it’s generally helpful to wait, there’s no sense in putting yourself in financial difficulty today so you can increase your income in the future. Consider alternatives first—like cutting your budget or working part time. If you’re left with no other options, however, you may have to file early.
Ready to develop your Social Security strategy? Let’s talk about it. Contact us today at Intelliplan Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov