Time for Claiming Social Security
Nov. 12, 2005 (WA). The million dollar question remains: when is the best time to start claiming Social Security? Even financial experts seem to be in contradiction as to the best age to start taking Social Security, so do not feel bad if your confused as well. The decision to rip benefits afforded by Social Security is vital since once made, it is irrevocable. The age at which you can get Social Security benefits in full, depends on the date of birth. Those who were born in 1960 or later cannot collect full benefits until they reach 67.
Higher payouts are made available by delaying the retirement past full benefits age. The government increases payout every month the retirement is delayed until age 70. Suppose you're eligible for full benefits at 67, and reduced benefits at 62. If you retire at 62, you get $700 a month, or $8,400 a year. Full benefits at 70: $1,000 a month, or $12,000 a year. If you take the reduced payment at 62, you'll collect $8,400 a year for five years. That would give you a big head start over someone who starts taking payments at 67. In fact, the person who starts at 67 would have to live to 78 before earning more in benefits than the person who starts at 62.
Taxes and the decision to continue working are also vital factors in determining the proper time in collecting Social Security benefits. If benefits are taken at age 62 and the beneficiary continues to work, the benefits would be reduced by $1 for every $2 earned above $12,000 a year. That reduction ends when full retirement age has been reached. If you do not mind working later, then waiting for the full benefit is not a bad idea, particularly given the increase in longevity. As a result, the beneficiary will be getting higher payout/s, as long as he/she lives.