Evaluating your Social Security decision can be tricky. Waiting to start benefits can pay off—if you live long enough. We’ll show you one way you can look at your situation.
Video: Evaluating Your Social Security Decision
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There aren’t a lot of choices you can make when it comes to your Social Security Retirement Benefits. In fact, you only have one choice–when do you start? So should you claim your benefits as early as possible, or should you wait?
Today we’ll dig into the numbers to show you how waiting can pay off in the long run.
Before we get into the weeds too far, let’s lay down a foundation. This is a simplified scenario, and there are often many different moving parts. We created this illustration using some generic and simple assumptions.
Also, for this episode, we won’t be talking about the impact this decision has on your retirement savings or other parts of your life. Those things should also be considered.
Your situation is unique. Please consult a professional before making any significant decisions.
A Case Study: Tom and Mary's Social Security
One of the biggest decisions Tom and Mary will make is when they start their Social Security. Do they retire this year? If so, it means they receive their benefits for a longer period of time.
But it also means, their benefits get reduced. In this case by 27%. In real dollar terms, it means they receive less.
Waiting means the discount shrinks, and they receive more each month compared to age 62.
And if they delay their retirement to age 70, they qualify for delayed retirement credits. This is where your benefits increase by 8% for each year you delay your decision.
62 vs. 65: Evaluating Their Options
62 vs. Full Retirement Age (66 and 6 Months)
62 vs. Maximum Benefits (Age 70)
Full Retirement Age vs. Maximum Benefits
Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors He typically works with people who are planning for retirement. Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio. Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.