The social security program is a crucial pillar in the retirement plan of many seniors across America. However, the decision of when to start claiming social security benefits remains complex and daunting for many, particularly when considering the options of 62, 67, and 70. In this article, we will delve into these three options to help you make an informed decision for your retirement.
Claiming at 62
The earliest age at which one can begin claiming social security benefits is 62, a choice many opt for due to various reasons. It means you can start receiving payments earlier than you would have, and this can be particularly enticing for those facing health challenges or who have stopped working earlier than anticipated. It’s also a suitable option for individuals who have enough savings or retirement benefits and view social security as an extra income source.
However, starting social security benefits at 62 comes with a significant downside – reduced monthly checks. When you claim benefits before your ‘full retirement age’ (FRA), calculated based on your birth year and typically between 66 and 67, your benefits are reduced proportionally for each month you claim them early. Hence, although claiming at 62 gives you access to the funds sooner, your monthly benefits will be lower, impacting your lifetime earnings.
Claiming at 67
For most people, the full retirement age has currently been set to 67. At this age, you’re eligible for 100% of the benefits calculated from your lifetime earnings. Claiming at your FRA ensures you do not face any reduction in benefits. Moreover, if you continue to work while claiming benefits, there are no restrictions on your earnings, unlike the case if you started claiming at 62.
However, waiting until 67 may not be optimal if you’re in poor health or if you don’t have a guaranteed income source to see you through your 60s. Plus, although you avoid the reduction in benefits, you also don’t benefit from any delayed retirement credits.
Claiming at 70
Delaying your benefits until the age of 70 could maximize your social security income in the long run. For each year beyond your FRA that you postpone claiming the benefits, your benefit amount increases by approximately 8%, up until you reach 70. So, if your health and finances allow, waiting till age 70 is a great way to secure a higher lifetime income.
The flip side of waiting till 70 is that it requires substantial savings or a steady income source during your 60s. It’s also important to remember that this delay strategy makes more sense if you predict a longer lifespan.
Deciding when to claim social security benefits is a personal decision, largely dependent on your health, life expectancy, financial needs, employment status, and personal preferences. To help in this complex decision, it may be helpful to speak with a financial advisor who can analyze your situation and provide personalized advice.
‘Retirement villages in Gold Coast’ present an example of an environment that can influence social security decisions, offering amenities and lifestyle opportunities that may factor into when you decide to start drawing benefits. Understanding the interaction of such lifestyle choices with your social security benefits can ensure you make the most of your retirement years.
Conclusion
In conclusion, while claiming at 62 can provide an immediate financial cushion, you may find a greater lifetime benefit by waiting until your FRA or even until 70 if circumstances permit. The “best” age to claim depends on various factors and differs from individual to individual.