3 Key Questions to Help You Make the Best Social Security Decision
As retirement approaches, you’ll face several important choices. One of the most critical decisions involves Social Security benefits – specifically, when to start claiming them. Your Social Security filing age can significantly impact your monthly income throughout retirement, so it’s crucial to make an informed choice.
You can technically start collecting Social Security at 62, but that doesn’t mean you should. Your benefits are directly tied to when you choose to file. If you claim before your full retirement age (FRA), which is 67 for those born in 1960 or later, you’ll receive reduced monthly payments.
Interestingly, you can also delay Social Security benefits past your full retirement age to boost your monthly check. This strategy maxes out at age 70, potentially providing you with larger lifetime payments.
Let’s explore three critical questions that can help you determine the perfect Social Security filing strategy.
1. Can You Continue Working While Receiving Social Security?
Good news: You can work and collect Social Security simultaneously. Once you reach full retirement age, your job earnings won’t impact your benefits. But if you’re still able to work, you might want to consider delaying your claim.
Working provides two significant advantages:
- You won’t need to tap into Social Security benefits immediately
- You’ll lock in larger monthly benefits for life
Pro tip: If you’re working before reaching full retirement age, be cautious. Earning too much could result in withheld benefits, making early filing even less attractive for your financial future.
2. What’s the Status of Your Retirement Savings?
Your retirement savings play a crucial role in determining the best Social Security strategy. If you’ve built a substantial nest egg, you have more flexibility with your Social Security filing decision.
With significant savings, you might:
- File for Social Security benefits early and enjoy extra income
- Delay benefits to boost your monthly check
- Use savings as a bridge while waiting to claim Social Security
The key is understanding your financial cushion and how Social Security fits into your overall retirement plan.
3. How Does Your Health Affect Social Security Eligibility?
Your health is a critical factor in deciding when to claim Social Security. If you’re in excellent health and expect a long life, delaying benefits could mean more money over time.
Consider these scenarios:
- Great health: Waiting might provide larger lifetime Social Security benefits
- Limited health: Early filing could make more sense financially
Experts recommend calculating your break-even age – the point where different filing strategies become financially equivalent. A financial advisor can help you navigate this complex calculation.
Making Your Social Security Decision
Choosing when to claim Social Security isn’t a one-size-fits-all decision. It requires careful consideration of your unique financial situation, work status, and health.
Don’t rush this important choice. Take time to evaluate your options, consult with a financial advisor, and create a strategy that supports your retirement goals and maximizes your Social Security benefits.
