5 reasons to take Social Security at age 67 could be a non-brain

According to two polls conducted by national pollster Gallup last October, Social Security should play an important role in helping you make ends meet during retirement. Surveys have shown that 90% of current retirees and 83% of non-retirees are, or expect, social security to be a "major" or "minor" source of income in retirement.

These data lead to a conclusion: deciding when to start taking your social security payment is incredibly important.

Your claim age makes a large difference on what you get paid social security

As a reminder, there are more than half a dozen factors that can really affect what you are going to report from Social Security. Of course, some of these factors are more important than others. For example, working at least 35 years and earning as much as possible in those years, at least within the income tax cap, can help maximize program performance. If you're wondering why I've chosen "35 years old", it's because the Social Security Administration (SSA) will consider your 35 most rewarding and inflation-adjusted years in the world. the calculation of your payment.

Your year of birth is also important because it helps to determine when you will reach the retirement age. Your retirement age is the age at which the Social Security Administration considers you eligible to receive 100% of your monthly benefits. For almost all future retirees (born in 1960 or later), your retirement age is 67.

And, as always, there is the age that you choose to start receiving your benefits. Although the benefits may start at age 62, the program offers an incentive for patience. Each year, an eligible claimant is late in receiving benefits, the potential monthly payment increases by about 8%, up to the age of 70. Other things being equal – work history, income history and year of birth – a retired worker who applies for benefits at age 70 could be up to 76% more per month than the individual who apply as soon as possible (62 years).

But what you need to remember about Social Security is that you are not just trying to maximize what you will receive each month from the program. We must also win the highest lifetime possible income. For some people, this could mean an early claim, while for others, a subsequent claim could be cautious.

Here's why the age of 67 could be the perfect time to apply for Social Security benefits

So when should you seek to take advantage of Social Security? Keeping in mind that there are no concrete or perfect guidelines, here are five reasons why the age of 67 (that is, the retirement age for future retirees) could be the perfect time to start receiving your payments.

1. You are guaranteed to receive your full monthly payment

For starters, if you are waiting for the retirement age, you will not receive less than 100% of your monthly benefit due, depending on your work history and your income. Given that more than three in five retirees depend on their benefits for at least half of their income, making sure you receive 100% of your payments could certainly help you cover some expenses during your retirement.

Two things you will want to keep in mind, however, are:

• Social security has been designed to replace about 40% of the average worker's wage. This means that it is not designed to be your main source of income.
• The program is expected to face a cash deficit estimated at $ 13.9 trillion between 2035 and 2093, according to the 2019 board of directors report. This means for you a possibility of future reductions in the benefits of retired workers ranging up to 23%. According to the little history we have, Congress saved Social Security an hour ago, but it should be noted that benefit cuts could take a little over 15 years.

2. You will protect your spouse

A second obvious reason to wait until age 67 to start receiving your Social Security payment is that you can ensure the financial well-being of your spouse by doing so, especially if you are supporting of family.

In addition to providing benefits to retired workers, Social Security also provides long-term disability insurance and survivor benefits. The latter comes into play when a spouse dies, leaving behind a surviving spouse or young children.

If a surviving spouse is old enough to claim, he or she will have the option of receiving a survivor benefit based on the deceased spouse's income history or his / her own retired worker benefits – whichever is greater. The fact is that the age of the initial application of the deceased spouse can determine the amount of the payment that the surviving spouse can receive. While waiting for your retirement age, you make sure your spouse has the option, at the option of their spouse, to maximize their monthly survivor payment.

3. You do not have to worry about the retirement income test

One of the best reasons to wait until age 67 to apply for a Social Security benefit is that you will not have to go through the dreaded retirement income test.

The retirement income test allows the SSA to deduct all or part of your benefits based on your annual income. The problem is that it only applies to the beneficiaries who have not yet reached the retirement age (that is, anyone aged 62 to 66/67). Once you reach your retirement age, even if you made a claim before that age, the retirement savings test no longer applies. And it is worth noting that you receive locked benefits in the form of a higher monthly payment once you reach your retirement age.

In 2019, the SSA can deduct $ 1 in benefits for every $ 2 of earned income greater than $ 17,640. This applies to people who will not reach the age of retirement this year. Meanwhile, the SSA can withhold $ 1 in benefits for every $ 3 of earned income greater than $ 46,920 in 2019 to beneficiaries who will reach retirement age this year, but who do not have it. still done.

Clearly, waiting until the age of 67 will completely avoid this mess, allowing you to continue working or earn additional income without the possibility of restraint.

4. Working longer can lead to greater gain

A fourth obvious reason to wait until the age of 67 to take advantage of your advantage is that it can encourage you to stay in the job market a little longer.

When you are younger, it is unlikely that you have the combination of skills and experience that companies are looking for, resulting in lower annual earnings. However, during many decades of activity in the job market, you will accumulate the skills and knowledge that companies should find useful, which will result in higher pay. This means that if you had to wait until age 67 to apply for social security benefits, you would probably be able to replace the lowest earnings totals in your teens or twenties with years of earnings higher.

Do not forget that the SSA will take into account your 35 most rewarding years and corrected for inflation when calculating your social security benefit. And chances are your highest income years are going to be at the end of your career. Working longer and waiting until you turn 67 can result in a slight increase in your monthly payment.

5. Statistically, you have a better chance of optimizing your lifetime repayment than claiming earlier.

Finally, the data showed that waiting for your social security benefit to be deposited gives you a better chance of optimizing your lifetime payment.

In June, United Income released a study entitled "The Solution for Retirement Hidden in View", which tracked over 2,000 senior households and charted when people benefited from it when it would have been optimal. The results showed an almost perfect reversal of the time when most people were receiving benefits (62 to 64 years) compared to when they should receive benefits (67 to 70 years). In fact, after the age of 70, the age of 67 was the second most likely factor to maximize the lifetime earnings of the program provider.

Obviously, it is a bit difficult to know when to take advantage given that we do not know (hopefully) our expiration date. But statistically, the data suggests that it is advantageous to wait more often.