When should I start taking Social Security?

The most common and confusing question for people planning for their retirement is the perfect age to start taking Social Security. It is quite commonly known that you can start taking Social Security distributions from the age of 62. However, very few people know that the Social Security distributions get reduced if you take them before you reach your full retirement age.




You should keep the following points in your mind when you are making a financial plan for your retirement with your financial planner:


When to start taking retirement benefits?


The best way to decide on the perfect age when you should start taking your retirement benefits is determined not only by your present circumstances but also by your family’s current situation. You need to make sure that you are making an informed decision and are not depending on anyone else to make it for you.


Make a Personal Decision


Make sure you choose the age you want the Social Security distributions by, on your own. If you start taking the distributions earlier than later, you will receive a lesser amount comparatively. This decision of choosing when you would like to start receiving your Social Security must be taken solely by you. The decision varies from person to person, depending on their requirements, their dependents, and their health. The decision can also be affected by your retirement plans and if you would have other sources of income during your retirement. In order to make an informed decision, you must consider your future financial goals, obligations, and needs. You should also calculate the Social Security benefits you would receive in the future. It is an important decision to make as it will affect the monthly benefit you would receive for the rest of your life and might affect your family as well.


The later you start taking your Social Security, the higher distributions you would receive


Your full retirement age is determined on the basis of the year you were born in. You can visit the website: https://www.ssa.gov/benefits/retirement/planner/agereduction.html to find your full retirement age. The Social Security benefits you receive are calculated based on your lifetime earnings. The amount, however, continues to increase at the rate of 8% per annum for every year you delay taking Social Security from the age of 62 to 70. The longer you wait to begin taking the distributions, the greater the reward. This change is usually permanent, as it establishes the foundation for the benefits you will receive for the rest of your life. If you continue to work, you'll earn annual cost-of-living adjustments and, depending on your work history, higher benefits.


Retirement is not as short as you think


When you start planning for your retirement, make sure to have a realistic approach to your planning. Often, it happens that women end up living for a longer time than men. We often end up living longer than we initially expected. Approximately one out of every three 65-year-olds today will live to be at least 90 years old, and one out of every seven will live to be at least 95 years old. Social Security benefits are essential insurance against outliving savings and other sources of retirement income since they endure as long as you live.


Social Security benefits in case you are married


Your spouse will also be eligible for Social Security benefits. The amount they would receive would depend on their and your working history. In case of the demise of your spouse, you would be eligible for widowed spousal benefits. You should also consider divorce spousal benefits. However, in order to claim them, you both need to be married for at least ten years. If you and your spouse both receive Social Security benefits, it is advantageous for the higher earner to delay their Social Security benefits. In such a case, you would end up getting more benefits.


After your death, your children might also be eligible for these benefits if they are under 18 years of age or if they have a disability that began before they turned 22.


You can still work post-retirement


You can work and earn as much as you wish once you reach full retirement age and still receive your full Social Security benefit monthly. If you're under the age of full retirement and your wages surpass specified thresholds, some of your benefit payments will be withheld for the year. This does not imply that you should aim to keep your wages to a minimum. We'll pay you a bigger monthly benefit when you reach full retirement age if we withhold some of your payments because you continue to work. As a result, working and earning more than the exempt amount will not reduce the overall value of your lifetime Social Security payments – in fact, it may raise them.


This is how it works: The Social Security Office adjusts your benefit when you reach full retirement age to give you credit for months when you didn't receive a benefit due to your earnings. Furthermore, as long as you continue to work and receive benefits, the Social Security Office reviews your file every year to see if the additional earnings will enhance your monthly payment.


You can find more information about it here: https://www.ssa.gov/benefits/retirement/


Medicare Benefits


In case you would like to delay receiving benefits because you are working, you would have to sign up for Medicare three months before you turn 65. It is not mandatory to register for Medicare before you turn 65, you can always sign up later. However, you might have to pay an extra late enrolment fee in this case. More information about Medicare can be found at https://www.ssa.gov/benefits/medicare/ .


More resources


You could also visit the website: https://www.ssa.gov/benefits/retirement/ to find more information about Social Security. In order to obtain a more personalized Social Security Statement, you can access the website: https://www.ssa.gov/myaccount/ .


We would be more than happy to help you with applying for Social Security and deciding on the perfect age to apply for Social Security, feel free to reach out to us at info@dunhillfinancial.com.

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