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Choosing a Smart Option for Collecting Your Social Security Benefits
If you’ve worked a job where you’ve paid FICA taxes, and you’ve worked enough quarters to qualify for payments from Social Security, you can start receiving payments as early as age 62. But you have options—here’s how it all works.
When You Can (or Must) Start Taking Social Security Payments
Under Social Security guidelines, you can start receiving benefits upon reaching the age of 62. You can wait, though, until you are 70, but must start collecting at that time. Full retirement age for purposes of Social Security is 66. If you opt to start collecting benefits at that time, you’ll be entitled to your full monthly amount. For each year prior to age 66 that you elect to receive benefits, your monthly payment will be reduced by approximately 8 percent.
In addition, if you choose to collect Social Security retirement benefits before age 66, there will be limits on income that you can receive from other sources without penalty. If you opt to take Social Security before full retirement age, you can earn as much as $17,040 in 2018. For every two dollars you earn above that amount, your Social Security benefits will be reduced by one dollar.
Factors that Affect Your Decision
The two principal factors that have the most impact on your decision to take early benefits or wait are your health and your marital status:
- Your health—The longer you wait, the higher your baseline monthly payment. Accordingly, if your health is good and you have income from other sources, you may be better served to wait. However, if your health is suspect, you may benefit from taking payments as early as possible. Consider this—if you start taking payments at age 62, you’ll have four years of payments in the bank at the age of 66, though the dollar amount per month will be smaller. With the increased amount you receive if you wait until age 66, you’ll still need to live to be 78 for the total amount of Social Security payments to be the same.
- Your marital status—If you are married and both qualify for Social Security retirement benefits, you typically want the wage earner with the highest income to wait the longest. That way, you’ll get the maximum benefit while both parties are alive, and you’ll also be entitled to the highest survivor benefit.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss.
Contact The Pinnacle Financial Group
At The Pinnacle Financial Group, we’ve provided professional risk management advice to individuals and businesses in New York and Connecticut for two decades. We understand the critical role planning plays in your financial future. We’ll carefully explain your options and the different strategies available to you, so that you can make the right decisions for you and your loved ones.
To schedule a free initial consultation, call our offices at 516-763-9700 or complete the form provided below.
