When you are getting close to retirement, one of the biggest decisions you face is when to start your Social Security check. While much of the decision is based on your age, there are other factors you should consider. You want to be sure you make the right decision for yourself, as well as for your spouse and children.
When can I take my Social Security Check?
For most people, the earliest you can start your Social Security check is age 62. (Widows can start benefits as early as age 60). The latest you can start your check is age 70.
Between ages 62 – 70, there are 96 months, meaning you have 96 different dates you can choose to start your Social Security check. Each month you delay, your check grows slightly larger.
So how do you pick one month out of these 96? The first place to start is looking at your personal Social Security statement. You can do that by going to SSA.gov.
Remember, every single person’s Social Security decision is going to be different. Do not make your election based on what worked for others.
Why should I take my Social Security check early?
Taking your Social Security check before your full retirement age does mean that you are going to have a reduced check. Despite this, it can be the right choice for many people.
Need the Money
If you need the money, taking your check early is going to be the right choice. Don’t delay your check if you are not going to be able to pay for essentials.
If you have dependents who are under 19 (still in high school) or have a disability, they will also receive a check when you start your Social Security. Starting your check early could mean more money over time if you factor in your dependents check. They can receive up to ½ your full retirement benefit amount and it does not decrease your benefit.
Low Life Expectancy
If you are in poor health and expect to have a shortened life, taking your Social Security check early can be the right choice. You can use Social Security’s calculators to find out how to maximize your benefit with your life expectancy.
We have a lot of clients come to us worried that if they don’t take their check now, Social Security will run out of money. If you believe this, it is worth taking your check early so that you can have peace of mind that you at least get some of the benefit you paid in for.
Negatives of starting Social Security check early
If you do start your check early and continue working or go back to work, you will have to give back part of your check. Taking it early not only reduces your benefit, but it also reduces your spouse’s widow benefit if you pass first. You will also have the possibility of losing more of your check to taxes taking it early as you are more likely to still be working.
Should I take my Social Security check right at Full Retirement Age?
Full Retirement Age, or FRA, is the age at which you can take your Social Security check without any reduction. Your FRA is dependent on your birth year. For anyone born after 1959, it is age 67.
It is important to know your exact full retirement age to base your timing decision on. Many people choose the month that they reach their FRA as the month to start their checks since most of the penalties no longer apply at FRA.
Once you hit FRA, if you continue to work, you will also not have any deductions taken from your Social Security check.
Why should I delay my Social Security check, possibly until 70?
Delaying your Social Security check allows it to grow. You will receive a larger monthly benefit for every month you delay. Your benefit can also increase if you continue working through your 60’s. Delaying your Social Security benefit is the right for some people.
If you like the idea of getting a larger check, and have the means to do so, delaying your check will allow for this. With this strategy, it is important that you assume you’re going to have a long life expectancy, otherwise delaying could leave you with less money overall.
Increased Spousal Benefit
The biggest reason to delay your check is if you have a spouse who is going to be claiming on your record. You can learn about spousal Social Security benefits here.
If you pass before your spouse, they will get to keep the larger of the 2 Social Security checks your household was receiving. That means if you delay your Social Security to make your check larger, that benefit could span over your spouse’s lifetime as well.
Like we have mentioned earlier, once you reach your full retirement age, even if you keep working, there are no deductions taken from your check. Even after hitting FRA, it is still possible your Social Security benefit could be taxed.
Tax on Social Security is based on your “combined income”. If your check is over a certain amount, up to 85% of your Social Security could be taxed. Delaying your Social Security gives you time to plan and possibly reduce your taxable income so that your check is tax free. If you retire at this time, your taxable income will also be reduced from the loss of paycheck.
Is my Medicare affected by when I take my Social Security check?
The answer to this is that it does not have to be. If you take your Social Security check before 65, you will automatically be enrolled in Part A and Part B of Medicare unless you opt out. If you delay your check, you can still sign up for any or all parts of Medicare. When you take your Social Security check and when you start Medicare are not connected.
Social Security timing is a complicated decision that can seem easy. Make sure to consider what all 96 months mean to your check, not just the amount of money. If you would like a free Social Security timing report from Cardinal, fill out the box below!