How to Invest and Save Money

How to Invest and Save Money
Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand.

Things to Consider When Determining When to Begin Taking Social Security Payments

Things to Consider When Determining When to Begin Taking Social Security Payments

By Britt Erica Tunick

For many people, Social Security is a key part of retirement planning. Whether you earned millions of dollars a year throughout your career, or only minimum wage, Social Security is something you’ve been paying into since the day you earned your first paycheck. And, as long as you’ve paid into Social Security for the equivalent of 10 years, or are married to someone who did, Social Security is something you are entitled to receive when you retire. The point when you begin to start collecting Social Security benefits, however, can have an impact on the amount you ultimately receive.

Although individuals born prior to 1955 have the option to begin collecting Social Security retirement benefits at age 62, doing so means accepting 25% less than you would be  entitled to if you waited a few years longer. That’s because the full retirement age for people born during these years, or the age when they are entitled to receive full benefits, is 66 years old.  And, if you are willing to wait a bit longer, the amount you are eligible to receive goes up eight percent each year until you reach age 70, which is why many people put off collecting benefits until this point.

Waiting as long as possible is not necessarily the best approach for everyone. Instead, deciding when to begin taking Social Security benefits should come down to your own individual circumstances. Needless to say, if you do not have any other source of savings or income to live off of at the time you retire, delaying the point when you begin taking Social Security benefits is not likely to be an option. If, however, your retirement savings and investments afford you the flexibility to hold off a little, waiting until age 70 is probably more attractive.

There may be other factors to consider as well. If you have any sort of serious health issues that create uncertainty regarding your likelihood to live into your 80s, you are better off taking your Social Security benefits as soon as possible. That’s because it is only when an individual reaches age  82 that the additional benefits of holding off until age 70 actually exceed the amount you would otherwise receive by beginning to collect your benefits at age 66.

Another factor to consider is that the Social Security system may not be able to pay benefits for individuals who will retire in the year 2035 or later without additional funding. The government has already acted to increase funding by gradually raising the age that individuals are eligible to collect full benefits to 67 years old, citing improvements in the health of the elderly and increases in life expectancy. There is still no guarantee that there will be enough money to fund the system for the long-term, however, making alternate retirement savings increasingly important for each generation after the baby boomers.

Given the various components involved in determining the best time to begin taking Social Security payments, consider consulting an expert to assist you in making this important decision, such as a financial advisor or your local bank.


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