As retirement approaches, you’ll likely face a number of big decisions. How should you allocate your investments? Which Medicare options should you choose? Do you continue to work part time? Should you downsize?
One of the biggest decisions you will face, though, is when you should file for Social Security benefits. It’s an important decision because it’s permanent. Once you file and begin receiving benefits, you won’t have an opportunity in the future to change your selection. That’s why it’s important for you to take some time and consider your needs and objectives.
When it comes to Social Security, you have a number of choices, but they all usually boil down to two broad options: now or later. Each option comes with its own set of benefits and considerations. Taking benefits now could give you instant income but possibly a reduced benefit amount. Waiting may give you more income, but you’ll have to wait to get it.
Which is right for you? There’s no universal right answer. It depends on your specific needs and goals. Below are a few things to keep in mind and why each option could be right for you:
Filing for Benefits as Soon as Possible
The earliest you can file for Social Security benefits is age 62. However, the earliest you can file for benefits without a reduction is at your full retirement age (FRA), which is between the 66th and 67th birthdays for most people.1
If you take benefits before your FRA, your payment will be permanently reduced, possibly by as much as 30 percent. The amount of reduction depends on just how early you file. The closer you are to your FRA, the smaller the reduction.2
Why would you take benefits early if it results in lower payments? There are a few reasons.
Waiting to File for Benefits
If possible, delaying benefits could be a wise idea. Social Security currently offers a permanent 8 percent credit to your benefits for each year you wait past your FRA to file. The longest you can wait and earn the delay credit is to age 70.3
Remember, it’s a permanent 8 percent increase for every year it’s delayed. That means that if your FRA is 66, you could delay for another four years up to age 70. Four years of an 8 percent credit would yield a total 32 percent increase in your benefits.
What are the signs that delaying is right for you?
Not sure about your plan for retirement income and how social security fits into it? Contact us at Carstens Financial Group in Arnolds Park, Iowa. We can help you analyze your needs and objectives. Let’s connect soon and schedule a time to talk.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov
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