As people near retirement age, a common question they may have is: When they should start receiving their Social Security retirement benefits? Due to the number of factors that can affect your benefit amount, as well as each individual’s unique situation, there is no clear-cut answer for when the perfect time to begin receiving benefits is. However, here are some things to consider when making the decision about what’s right for you:
Taking Benefits Early Means Significantly Smaller Monthly Payments
Perhaps the biggest factor that may affect your decision regarding when you begin receiving benefits is the fact that the earlier you begin receiving benefits, the smaller your per-month benefit amount will be. For example, a person who was eligible to receive a benefit amount of $750 per month starting at age 62 would instead be able to receive a benefit amount of $1,320 per month if they began receiving their benefit at age 70 instead.
This is how it works: If your full retirement age is 66, but you decide to start receiving benefits at age 62 instead, then your benefit amount will be reduced by 25 percent (an amount of $1,000 is reduced to $750). On the same note, if you begin receiving your benefits later in life, then your benefit amount per month will be increased. The reduction/increase is made to account for the longer/shorter period of time that you will be receiving benefits – usually, the total amount that you receive over a lifetime is the same, or close to the same, regardless of when you begin receiving benefits.
Think About Medicare
Remember, retirement benefits aren’t the only benefit type that the Social Security Administration provides. According to the Social Security Administration, those who are delaying receiving retirement benefits because they are currently working should sign up for Medicare benefits three months before reaching age 65. Signing up for Medicare early can help keep your premiums low, and can be a beneficial way to receive help with medical expenses, even if you’re not yet receiving retirement benefits.
Keep Your Family in Mind
Another thing that you’ll want to consider while thinking about when to begin collecting Social Security retirement benefits is whether or not you have any dependent family members, including a spouse and children under the age of 18. If you die, then your spouse may be able to begin receiving benefits—known as Survivor Benefits—based on your Social Security record. However, your spouse’s benefit amount will be reduced if you begin receiving your benefits early.
Thinking about when to begin collecting your Social Security retirement benefits can feel overwhelming. To help you make a decision that’s best for you and your family, you need to get in touch with a professional Social Security consultant today.