A common question among soon-to-be retirees is whether they should begin taking the Social Security benefit early at age sixty-two, at the full retirement age of sixty-six, or at age seventy. One of the first questions that I usually ask concerns your family’s longevity history. I will ask a husband and wife how long each of their parents lived. How long did their grandparents live? My grandparents lived into their early nineties. With improvements in health care, there is a greater probability of living a long life.
If longevity runs in your family, then it may be prudent to postpone your social security benefits so that the monthly payment will grow larger as time progresses. Much depends upon whether you have enough assets to sustain your lifestyle without Social Security. Among my clients today, I have couples that defer their social security benefit as long as possible. They have calculated that they will be better off by spending down their assets at a somewhat higher percentage for several years while the amount of their future benefit grows annually, reaching its peak at age seventy.
The decision to delay until age seventy can result in a far greater combined Social Security benefit over the course of a couple’s retirement. However, the decision to take that route needs to be preceded by a frank discussion: If the people in your family do not typically live long lives, and particularly if either (or both) of them are in failing health, then it may not make sense to delay receiving the income. If you elect to delay collecting the full social security benefit until age seventy rather that claiming it at age sixty-six, you will be forgoing four years of payments in exchange for a larger benefit. That being said, the break-even point does not occur until your late seventies to early eighties, depending upon your date of birth. If your parents have died in their sixties or seventies, you may decide that the odds of living longer are against you and choose to begin benefits earlier.
Many other variables can enter the equation on which benefit option makes the most sense for you. To learn more, a CERTIFIED FINANCIAL PLANNER™ professional (CFP®) is an excellent place to start. You can also check with the Social Security Administration (ssa.gov), but you will need to research their resources thoroughly to determine the best strategy for you. We can provide comprehensive comparisons for clients in our office.
Keep in mind that many personal and household factors can influence decisions on Social Security benefit options. The most significant factor is the age at which you opt to begin benefits.
**Excerpt From “Financial Stability for Life”, by Daniel E. Butler, CFP®
Any opinions are those of Butler Financial, LTD. and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.
