Social Security can prove to be a significant piece of anyone’s retirement plan.
During your career, money is taken out of your paycheck as a payroll tax to fund the Social Security program, but will ultimately become a monthly benefit to you in retirement.
However, when you decide to retire and begin accepting Social Security payments could have a drastic effect on your payment amounts.
The best age for Social Security benefits depends on personal and financial factors, like your current cash needs, retirement plans, health and family history. Be sure you weigh the decision carefully and don’t hesitate to find a financial advisor to talk to if you have questions.
This free retirement quiz can match you with up to three financial advisors who serve your area and are legally bound to work in your best interest.
There are a few different ages to keep in mind when considering taking out Social Security benefits:
is when you can officially begin accepting Social Security benefits
Age 66 or 67
(67 for those born after 1960) is your “full retirement” age and when you’ll need to work until to qualify for the maximum monthly benefits
is the age the maximum Social Security retirement benefit kicks in
That said, benefits at age 62, 66, or 67 are not your maximum benefits. If you claim before the age of 70, you’re not getting your full entitlement.
Each year after full retirement, your payout increases by a certain percentage based on specific criteria. To maximize on this strategy, we recommend considering holding off until you are 70 -- if your situation allows. Payments will be the highest possible, increasing by up to 8% each year you wait. Your benefit claimed at 62 is about 30% lower than it would be at age 70.
While this strategy can help you collect the highest Social Security benefit, every situation is different. Consult a financial advisor to figure out how and when Social Security benefits should factor into your unique retirement plan.