Oh, make decisions. Many decisions we make, such as the choice of lunch or wearing the blue or black suit at work, matter little. However, others, such as retirement decisions, can have a significant impact on our future financial security and, therefore, on our future happiness.
A key retirement decision that many of us will have to make is when to start collecting our social security benefits. You can start at age 62 and up to age 70, and your benefit checks will be bigger or smaller depending on whether you start collecting late or early. For your checks to be as large as possible, delay the start of collection until age 70. But should you do it? Not necessarily.
Here's an overview of why you might want to claim your Social Security benefits at age 70 and why you might not.
Reasons to claim social security at age 70
Let's start by explaining why you could delay collection until the age of 70. Know that each of us has his or her retirement age at which we can begin to collect their "full" retirement benefits – every dollar to which we are entitled. For most of us these days, this age is about 66 or 67 years old. But for each year beyond your retirement age that you delay, up to the age of 70, the value of your benefits will increase by approximately 8%. Delay from 67 to 70 and you can increase the number of your checks by 24%. This seems like a good reason to delay. Here are others:
- You can not afford to retire earlier. Many people are far behind in saving for retirement. So, they expect to retire later than they would like. (About 19% of workers aged 55 and over report saving less than $ 1,000 for their retirement, according to the 2018 survey on retirement trust.)
- You do not need money. If you are lucky enough to not need the income you would have from Social Security until age 70 or older, waiting for bigger checks may be a reasonable choice.
- You expect to live long. An underestimated fact about social security is that if you live a life of average duration, your total benefits will be about the same as you started to perceive sooner or later. Start early and you will get smaller checks, but they will be much more numerous. So, if you have a good chance of living a long time – and if you do not have an urgent need for income before age 70 – consider waiting until age 70 for those bigger checks.
- You earn more than your spouse. If you plan to live a medium life or even shorter, it may be wise to differ in certain circumstances. For example, imagine that you are married and have always earned much more than your wife. You can decide together that she will start collecting early or in time and that she will try to hang up until she is 70 years old. That way, you'll earn income sooner, and more, with two checks once you're 70 years old. When one of you dies, the survivor collects only one of these two checks, but can take the bigger one.
- You plan to continue working. If you plan to continue working until you are around age 70, be aware that Social Security reduces your social security check by $ 1 for every dollar earned by working above $ 17,640 if you do not have one. not reach retirement age. If you have reached the age of retirement or if you have reached the retirement age, your benefits are cut by one dollar for every $ 3 above $ 46,920. (These income thresholds are for 2019. They change from time to time.) This is not the end of the world, because the benefits retained do not disappear; instead, they are used later to increase the size of your monthly payments.
Reasons to do not claim social security at 70
This is a lot of reasons to consider waiting until age 70 to claim your benefits. But the reasons for not waiting are just as convincing, if not more:
- You have a decent chance of living below average life. If you are not healthy, or if many of your family members have died young, starting to collect these checks as soon as possible will help you maximize the money you receive from the program.
- You want to retire early – and can. If you have diligently raised money for your retirement and are about to retire early, a Social Security income can help you do it. Early retirement is a good choice for most people who can, because it means that they will be younger at the beginning of their retirement and that they will probably be more able to appreciate it. , to be active, to travel and perhaps to play sports.
- You need money as soon as possible. Although many people retire earlier than expected, many more end up unemployed earlier than expected, often without enough money to support them. So, getting these social security checks can be a lifesaver.
- You earn less than your spouse. If you earned less than your spouse during your working life, your benefit checks will probably be smaller than theirs. You may be able to use the strategy outlined above by starting to collect your checks sooner, while waiting, if possible, until the age of 70.
- The benefits could be reduced in the future. A final consideration is this: social security changes from time to time. Benefit levels may change, increases may change, tax rates that support social security may change, and so on. The program faces challenges in the coming years as its surplus years are about to run out and, although our congressional representatives can strengthen the program, they may choose not to do so. Some people think that it is not a bad thing to start collecting your benefits as soon as you can, in case they are reduced because you could benefit from acquired rights at the highest level. Remember that these are only speculations, but that deserves some attention.
The decision to start collecting social security benefits is a personal decision, which depends on your needs, your financial situation and the strategies you have put in place. Be sure to read about social security, so that you make smart decisions that will maximize your future earnings.