Ever since President Franklin D. Roosevelt signed off on the 1935 Social Security Act, most Americans have ended up pondering this critical question as they approach retirement:
“When should I (or we) start taking my (or our) Social Security?”
And yet, the “right” answer to this common query remains as elusive as ever. It depends on a wide array of personal variables. It depends on how Congress acts. It depends on how the unknowable future plays out.
No wonder many families find themselves in a quandary when it comes to taking their Social Security benefits. Let’s take a closer look at how to find the right balance for you.
For Social Security planning purposes, you reach full retirement age (FRA) between ages 66–67, depending on the year you were born. However, you can generally begin drawing Social Security benefits as early as age 62 (with the lowest available monthly starting payments) or as late as age 70 (for the highest available monthly starting payments).
Retirees are often advised to wait until age 70 to begin taking Social Security. In raw dollars, waiting to take your Social Security often works out to be the best deal for many families. Plus, these days, many of us choose to work well into our 70s and beyond. Some analyses have even factored in the cost of spending down other assets while you wait, rather than using them for continued investment growth. The conclusion is the same.
However, you are not “many families.” You are your family. Your personal and practical circumstances may mean this general rule of thumb will not point to your best choice. Following are some of the most common factors that may influence whether to start taking Social Security sooner or later.
Clearly, there is a lot to think about when deciding when to start taking Social Security. Whether you are going it alone or with a financial planner, here is one piece of advice that should help:
Control what you can. Let go of what you cannot.
What do we mean by that? There are many known factors you can include in your Social Security planning. You know your marital status. You can access your Social Security account and/or use a calculator to estimate your benefits. You can make educated guesses about your life expectancy, how long you will work, and so on. Also, if you have delayed taking Social Security past your FRA, you may be able to change your mind, to a point. You can file to collect up to six months of retroactive benefits if you end up needing the income sooner than planned.
You can use all of this planning information and more to make reasonable assumptions and timely decisions about when to take your Social Security.
After that, we recommend going easy on yourself if (or more realistically, when) some of your plans do not go as planned. Come what may, you have done your best. Instead of channeling energy into regretting good decisions made, use it to make judicious adjustments whenever new assumptions arise. By consistently focusing on what we know rather than what we hope or fear, we remain best positioned to shift course as warranted in the face of adversity.
Whether you are planning to file for Social Security or you are already drawing it, we are here to help you and your family make good choices about when, and how, to manage your available options. Please contact us by calling (781) 291-3001 if you are interested in speaking with a member of our team.
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This post was prepared and first distributed by Wendy J. Cook.