If you’re nearing your 62nd birthday, get ready! The time has come to decide when and how to start collecting your Social Security benefits.
I know you’re thinking: “When should I start collecting?” I’ll let you know now that the answer depends on you and your unique situation. However, the current window to collect Social Security is between the ages of 62 and 70. But here’s the catch: the longer you delay retirement, the higher your monthly payout will be.
How much will your payout be? It’s not a set amount. Your Social Security benefits are determined by two factors: the total amount you’ve earned over the years and the age at which you begin collecting compared to the normal retirement age.
Speaking of which, what’s the normal retirement age? It’s not a one-size-fits-all answer. It differs depending on your birth year. For example, if you were born in 1937, the normal retirement age is 65. But if you were born in 1957, it’s 66.5.
If you choose to begin collecting Social Security before your normal retirement age, your payout amount can be reduced by as much as 30%. Also, if you start collecting your benefits early and your income is greater than the annual earnings limit, there are other penalties.
But what if I decide to wait to collect Social Security? Every month you delay past your normal retirement age your Social Security benefits increase. If you were born between 1925 and 1942, your monthly benefits go up by 0.29%. If you were born after 1942, it increases by 0.67%.
So when should you retire? Should you retire early? Late? On your 62nd birthday? Well, that depends on your specific financial situation and how long you expect to live.
If you come from a family blessed with longevity, you could delay collecting benefits to receive a higher payout. On the other hand, if you believe your life expectancy is shorter, starting at age 62 could be the better option. It’s all about finding the balance that suits your needs.
Something to note: Social Security benefits typically cover only about a third of retirees’ income on average. So, it’s crucial you have other savings strategies in place to support yourself throughout retirement. I know it can be overwhelming, but fear not. It might be helpful to schedule a meeting with your financial advisor or your local Social Security office to take a closer look at all your options.
And hey, if you still have burning questions, don’t hesitate to ask. I’m here to help. The Social Security Administration also has a wealth of information on retirement benefits, including a handy document to determine your normal retirement age and to help you estimate your benefits. Check it out here: https://www.ssa.gov/pubs/EN-05-10035.pdf.
Anyway, glad we could have this chat. If you need anything else, holler.
