STEPHEN SMALENBERGER, EA
This is a topic that becomes important especially when someone is considering retirement or is already retired.
When does it make the most sense to start collecting? That really depends upon your specific situation.
In order to start receiving the full value of the benefits that you’ve accumulated over your working career, you will need to wait until age 66 or 67, based upon your actual date of birth.
The earliest that anyone can start receiving your own benefits would be age 62. It could also be 63, 64 or 65. However, the amount of the benefit will be reduced since it started prior to reaching Full Retirement Age (FRA).
The Social Security Administration has created a calculator to help in determining your FRA. See the following link: https://www.ssa.gov/planners/retire/ageincrease.html
If you wait until after Full Retirement Age (FRA), the monthly benefit increases at a rate of 8% per year for each year that the benefit is delayed. The latest that it can be postponed until is age 70.
By default, most people will start collecting at their respective Full Retirement Age.
Yet, there are some planning reasons to either start early or delay depending upon:
- Life Expectancy
- Health Condition
- Cash Flow Needs
These are just a few of several discussion points that we will have with you. It is important especially since not only does your decision impact your own benefits, but it may impact a spouse’s future benefits as well.
This is one “asset” or source of income that you are not able to pass on to heirs in addition to their own benefit… so we need to get this right!
Therefore, it makes sense to take the time, do the math and planning in order to make an educated decision.
As always, there are many considerations and details not addressed in this post. It is meant to be general and educational in nature. However, if this raised a question or prompted curiosity on how various planning strategies could potentially be applied to your particular situation… please let us know. We are happy to help!