For many years, politicians and others have been saying that Social Security will run out of money before it’s time for you to draw benefits. So far, that hasn’t happened, but many people want to begin drawing benefits as early as possible to make sure they get their fair share of retirement benefits after paying into the system for so many years.
But as you may have heard, you don’t have to wait until your full retirement age (currently 66) to begin drawing Social Security retirement benefits. The opposite is also true—you can delay drawing benefits until as late as age 70. The longer you wait to begin drawing benefits, the greater your monthly benefit. How much more, you ask?
A recent article in Forbes entitled When it Makes Sense to Take Social Security Income at 62 does a good job summarizing the difference:
Waiting until your full retirement age can provide a higher lifetime income. When you file for Social Security at your full retirement age (which depends on your birthdate and is currently age 66), you receive 100% of your benefit. If you take your benefit early, at age 62, you only receive about 75% of your monthly benefit. Every year you delay taking it, your benefit goes up until age 70. If you delayed until then, you’d have approximately 132% of your benefit.
The article goes on to point out a few instances where it actually makes sense to draw a lower benefit now rather than waiting until full retirement age, or beyond. For example, if you are unemployed or underemployed, or if you are drawing down on your investments to meet your basic living expenses, tapping into your Social Security income earlier could actually help you preserve more assets over time.
For more information, check out the complete article at Forbes, or consider talking with your financial advisor. Some advisors even have access to proprietary software that can help you calculate the best time to begin drawing Social Security benefits based upon your particular financial situation.