Photo of Ray Ferrara CFP Ray Ferrara CFP Sep 15, 2020

You might already be aware that you are eligible to start receiving Social Security retirement benefits at the age of 62. However, you may want to consider delaying your benefits until you reach your full retirement age or even until age 70. But why would you do this? After all, if you are entitled to Social Security benefits, you should take advantage of them right away, right? 

Well, it turns out, it is often a very good idea to delay your benefits until a later age. Join us as we break down how your Social Security benefits work and when you should consider starting to make withdrawals.

When to take your Social Security benefits

Everyone who has worked and paid taxes into Social Security for 40 quarters (10 years) is entitled to receive Social Security benefits at the age of 62. However, when you elect to receive benefits right away when you are eligible, you only receive a partial portion. This looks different depending on the year you were born, so for example, let us take a look at how Social Security works for people born in 1960 or later.

If you were born in 1960 or later and you withdraw Social Security at 62, your amount received is reduced by about 30%, versus taking it at age 67, which is your full retirement age (FRA), where you would get 100%. This means that if you are entitled to a $1,000 monthly Social Security retirement benefit at FRA, you will only receive $700 instead. Additionally, if your spouse chooses to use the spousal benefit as opposed to his/her own, then the spouse’s $500 monthly benefit is reduced correspondingly. A spouse can use his/her own benefit or 50% of the spouse’s benefit, whichever is higher.

Making this decision is not easy, and there are over 500 different combinations. Once made, the decision to take Social Security early or delay is difficult to change. No one can decide for you when it is right to take your benefits. If you have built a nice retirement nest egg, have supplemental income, or are living well within your means, you might be able to afford delaying your benefits for a few months or years to earn yourself a larger monthly withdrawal when you decide to start. Or, if your retirement savings are not as high as you would like them to be, it might be in your interest to start withdrawing sooner rather than later.

You can use a tool like this Social Security calculator from the Social Security Administration to help you estimate your benefits. You can also always talk to a financial advisor for guidance.

Talk to a ProVise CFP® professional about your retirement planning

Picture a boxer entering the ring and swinging wildly at his opponent. One or two blows might land, but he is bound to miss a lot and make himself vulnerable. Instead, with patience and a careful strategy, he can overcome his opponent. Financing your retirement is the same way. You do not want to go in swinging, making decisions without careful thought or patience. However, navigating the financial landscape and all its complexities is difficult when you do not have the time or skills. Fortunately, we do at ProVise Management Group, and we have software available to help you through the Social Security maze.

At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about saving for retirement? Contact ProVise today to schedule a complimentary consultation.