If you are an US citizen then part of your strategic retire early plan will include collecting your Social Security sometime in the future. The question becomes, what is The Best Age to Start Social Security? After all, your early retirement is funded by your assets. Receiving your Social Security retirement benefit will relieve some of that self-funding pressure over the long-term. There are many factors to consider before figuring out when the Best Age to Start Social Security is for you.
At this time, the earliest retirement age for social security that you can start collecting your benefit is age 62. However starting at age 62 means the amount you receive is reduced 25% of what your full retirement age for social security benefit would be. Your Social Security checks will be higher by waiting to collect until you reach your full retirement age for social security. But your postponement also means you will get less checks over your lifetime.
Your full retirement age for social security depends on the year you were born in.
| 1937 and prior -Age 65 1938 – 65 and 2 months 1939 – 65 and 4 months 1940 – 65 and 6 months 1941 – 65 and 8 months |
1942 – 65 and 10 months 1943 to 1954 – Age 66 1955 – 66 and 2 months 1956 – 66 and 4 months 1957 – 66 and 6 months |
1958 – 66 and 8 months 1959 – 66 and 10 months 1960 + Age 67 |
(Note: If your Birthday is January 1 then use the prior year to find your full retirement age.)
There are many strategies to optimize your Social Security benefit depending on marital status, current health and estimated life longevity.
There are also tax considerations if you begin payments before your full retirement age for social security. You can even delay taking your benefits until age 70. Your benefit will increase 8% above your full retirement age for social security benefit amount for each full 12 months you delay.
So what is The Best Age to Start Social Security?
Almost every financial Social Security authority says to delay until at least your full retirement age for social security. If possible delay until age 70 so you receive larger payments.
There are some who suggest taking it at as soon as possible at age 62. Even if you don’t need it to be retired. Just invest it and the gains will outpace the benefit of delaying payments. At the very least it could take pressure off of you investments so that they aren’t hit so hard.
The real answer to the question, what’s the Best Age to Start Social Security?
It depends on your specific situation. Sure there are ways to game the Social Security system to maximize your payments. But it is designed so that you get the same amount no matter when you start to collect. That is if you live to the exact date of your projected mortality based on the tables they use.
- Claim at age 62 you get lower payments but more of them.
- Claim at full retirement age for social security or later you get less checks but in larger amounts.
- You can look at the numbers and determine the break-even point.
Here is the way I see it now, more or less suggestions to help understand the options and the best strategy to Social Security collection.
Review annual Social Security estimate statements
Review annual Social Security to understand the payment amounts associated to taking Social Security early at age 62, full retirement age, and age 70. If you are not getting them in the mail, create an account to review your benefits at “My Social Security Account” on the Social Security website: http://socialsecurity.gov/myaccount/
Take a look at different Social Security filing dates and the overall benefit differences
Once your estimated Social Security numbers are known then you can use a good benefit filing calculator. A Social Security Strategy calculator I recommend is OpenSocialSecurity.com. It is especially good to use if you are married and want to optimize your Social Security benefits. All you need to start is your (and spouse if applicable) full retirement age (FRA) estimated monthly benefit (PIA) amount and birth date. It will calculate the most financially optimum filing age. You can also run the calculator with whatever benefit start date you are wanting impact results for too. In my case the original results were I claim at age 70 and my wife at age 62. But I rerun the numbers where I file at my FRA of 66.8 and my wife at age 62 and the difference was $38K less than my waiting for age 70.
Run the numbers through a good retirement calculator
Use a retirement calculator and change the when and how much of Social Security you will be collecting to see if your assets can support your retirement for the long, long-term. I recommend using the Firecalc site (http://www.firecalc.com/index.php) to run your numbers annually, using the “other income/spending” tab to check outcomes under the different Social Security collection scenarios.
Review the Social Security Benefits publication
As time gets closer to reaching age 62 start reading the Social Security Benefits publication http://www.ssa.gov/pubs/EN-05-10035.pdf to understand the current tax and payment options because what is in the publication today may not be the same as what is there when we reach age 62.
Reassess financial and physical health at age 62
At age 62 evaluate your financial numbers and current health status. Simply, if you need the money then collect the money but do so understanding all that comes with early collection. If ill and believe life may be cut short, then collect (if married there may be spousal survivor benefit considerations). Again, do so understanding all the implications for your unique situation.
What I am thinking about my Social Security strategy.
Since I may still be open to opportunities of interest while doing my retire early and often thing I plan on waiting until my full retirement age for social security. I want to avoid the tax consequences of collecting Social Security early and earning an amount that would place me over the low total income thresholds. I am also married so I have survivor benefit considerations. At this time, based on my OpenSocialSecurity calculator results I believe my wife filing at age 62 and my filing at full retirement age is our best Social Security filing strategy.
There may be Social Security Tax Strategies that would be beneficial to include in your retirement funding plan where delaying Social Security should be considered.
Because Social Security decisions MAY be final once made, consult with a professional before pulling the trigger. That is my current plan.
Final Note
If you have in interest in all things you and Social Security they have many interesting social security calculators on their site. Information is power. Get curious and informed. http://www.ssa.gov/planners/benefitcalculators.html
I am not a Social Security expert nor a financial planner. I am only offering general information and some considerations. Social Security age for those of us on the early retirement track is far off, so it is little tough to lock-in now on a strategy. The best we can do is run the numbers with what we have today through a good retirement calculator, a good social security benefit calculator, keep informed about the Social Security plan, and fight to keep it viable with our votes.
Social Security was never meant to be a full retirement funding benefit. Yet it is the only thing that a large majority of Americans have and can count on in their old age. The failure of all the other private retirement options reaching and benefiting everyone means that Social Security is the only actual retirement program that WORKS. Don’t let the One Percent and their special interest get away with diminishing or destroying it by turning it into a welfare program. It is a Retirement Benefit. It is OUR Retirement Benefit.