Social security and retirement go hand in hand. It’s a system that you’ve paid into for your entire working career and now that you’re reaching your retirement years, it’s time to get your benefit! You’ve probably heard rumors about social security in the past, maybe someone told you to get in early to make sure there’s any left, or maybe you’ve heard that you’re supposed to take your spouses benefit and delay your own. You might have even called the Social Security Administration only to end up more confused than when you began. With all the information circling around social security, it’s hard to decipher what is actually the right way to go about it.
First, let’s talk about your options.
Applying at 62
The earliest time to apply is at age 62. While this might seem appealing, you get to start collecting on your benefit after all, there are two reasons to hold off applying for Social Security at 62. The first is if you’re still working. If you are younger than your Full Retirement Age (FRA) and collecting social security, the social security administration will deduct $1 for every $2 that you earn above $19,560 (2022). The second reason you may want to wait to collect at 62 is because you will receive a reduced benefit than you would otherwise get at FRA or age 70.
Applying at Full Retirement Age
The next popular option is to apply for benefits at your Full Retirement Age. This makes sense for a lot of retirees, they are no longer working and need the extra income, and they will receive their full benefit amount. The good news is that if you are at FRA or older, and you are still working, you won’t receive a reduction in benefits regardless of how much you earn. However, if you are still working, or you don’t need the income yet, it might make sense to wait and allow your benefit to grow at roughly 8% each year until you are 70 years old.
Applying at 70
Finally, the longest you would ever want to wait to apply for Social Security is 70 years old. That is because at 70 your benefit stops growing and there is no reason for you not to collect on it! Whether you need the income or not, it is entitled to you at this point and you’ll want to take advantage of receiving it.
Determining the right strategy for you
Now that we’ve laid out the basics of when you can apply for social security, you may be thinking ‘Okay but when should I apply?’
For most people, it will be after retirement either at FRA or age 70. For some, it might make sense to defer their own benefit, let it grow until age 70, and collect on their spouses benefit for a couple of years. Keep in mind that depending on your occupation, there might be other provisions that apply to you and your benefit so the best way to determine the right strategy for you is to complete a Social Security Analysis. This will provide you with your different options, and the breakeven age at which you would have been better off waiting and allowing your benefit to grow rather than collecting early.
Social Security is one of those things that we’ve all been paying into and are anxiously anticipating our benefit from. To determine how to make the most of your benefit, and the right decision for your family, start by completing an analysis alongside your advisor and determining the best path forward for you.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.