One of the most common questions people ask about Social Security is when they should start taking benefits.
This is the $64,000 question. Making the right decision for you can have a meaningful impact on your financial income in retirement.
Before considering how personal circumstances and objectives may play into your decision, it may be helpful to preface that discussion with an illustration of how benefits may differ based upon the age at which you commence taking Social Security.
As the accompanying chart reflects, the amount you receive will be based upon the age at which you begin taking benefits.
Monthly Benefit Amounts
Based on the Age that Benefits Begin¹
*This example assumes a benefit amount of $1,000 at the full retirement age of 66.
At first blush, the decision may seem a bit clear-cut: Simply calculate the lifetime value of the early benefit amount versus the lifetime value of the higher benefit, based on some assumed life expectancy.
The calculus is a bit more complicated than that because of the more favorable tax treatment of Social Security income versus IRA withdrawals, spousal benefit coordination opportunities, the consideration of the surviving spouse, and Social Security’s lifetime income guarantee that exists under current law.²
Here are three ideas to think about when making your decision:
There are several elements you should evaluate before you start claiming Social Security. By determining your priorities and other income opportunities, you may be able to better decide at what age benefits make the most sense.