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Social Security Retirement Benefits: When Should You Start Receiving Yours?

Friday, March 01, 2019

When should you start receiving Social Security retirement benefits? Truthfully, there is no one-size-fits-all answer. Just because you are eligible to receive benefits though, doesn’t mean it’s wise to start drawing them immediately.

Many Americans rely on Social Security benefits to support their families after they retire; you may plan to do the same. “When should I start receiving benefits?” is a question that requires careful consideration. The amount of Social Security retirement benefits you and your family receive overall is directly related to when you start claiming those benefits.

If you are eligible for Social Security, you will have to make your first decision about receiving retirement benefits at age 62. Although the federal retirement age, or FRA (for everyone born after 1959), is 67, you can choose to start receiving benefits, discounted by 30%, as early as age 62.

“For example, if an individual qualifies for a retirement benefit amount of $1,429 per month starting at age 67, he or she could elect to take a reduced benefit amount of $1,000 per month starting at age 62. This, of course, would come at the cost of giving up the additional $429 per month until death.”

On the other hand, you could opt to delay receiving Social Security retirement benefits. If you delay receiving benefits until age 70, for example, you will receive annual delayed retirement credits of 8% per year. In other words, you will receive 8% more Social Security retirement benefits from age 70 until death if you should decide to delay receiving benefits by 3 years, receiving benefits starting at age 70 instead of 67.

Factors to consider when deciding “when?” include how long you plan to keep working and your cost of living. If you choose to start receiving benefits while still working and make over a certain amount annually, you may have to pay back some of your Social Security benefits. Additionally, you will need to anticipate how your cost of living might change in coming years. While drawing fewer dollars in benefits each month means that Social Security will last you longer, sometimes choosing to draw more each month is the best option.

For example, if you receive a $1,000 per month pension that covers housing and food, but not much else, an increase in the amount you receive each month would allow you to pay for health coverage. Health coverage ensures you’ll receive the care you need and gives you peace of mind, thereby improving your quality of life. 

Ideally, you want to get the greatest total lifetime benefit from Social Security, but without knowing exactly how long your life will be, it can be challenging to decide when to start receiving benefits.

 There is more than one way to determine when to start receiving Social Security retirement benefits, but the question of “when?” must ultimately be answered on a case-by-case basis, and it’s important to have all the facts before making your decision. Your Social Security benefit strategy should enable you to retire the way you want to retire, and live the way you want to live.

Visit the Social Security website to learn more. https://www.ssa.gov/planners/retire/retirechart.html and https://www.ssa.gov/pubs/EN-05-10147.pdf 

This article is based on “Social Security Retirement Benefits: A Timing Model for Working Families,” by Francine K. Lipman and James E. Williamson, which was published in Volume 14 of the National Academy of Eder Law Attorneys (NAELA) Journal.