In earlier posts, we have discussed the benefits of waiting until age 70 to receive the largest monthly benefit check. At what age one decides to collect SSA is a personal choice? For individuals who do not need the money immediately, delaying the receipt of the benefit makes economic sense. Likewise, family medical history plays a major part in deciding when to begin to receive benefits. Individuals who have a poor medical history or family genes, as well as those who have not adequately saved for retirement, are likely to opt to begin to receive benefits early.
By way of background, 75% of Americans claim their social security (SSA) benefits before they reach their “full retirement age.” Among them, 46% of the total did so at the earliest eligibility age of 62, according to the Consumer Financial Protection Bureau (CFPB). “Full retirement age” is defined as those who reach age 66 or 67 (determined by year of birth).
Government studies show that some individuals, by claiming their benefits early, cost themselves significant money. “When to claim Social Security is for many older Americans the most important financial decision they ever make in their lifetime,” says Olivia Mitchell, an economics professor specializing in pension research at the Wharton School of the University of Pennsylvania. “My motto is work longer, save more and expect less.” Well if you have some alternative retirement funds that you can use before claiming SSA benefits, how do you determine at what age you should begin to receive your SSA benefits?
The Social Security Administration has a benefit estimator on its website which can be found by Clicking Here. You can do some “what if” analysis by using different assumptions for the year that you wish to begin receiving benefits. Remember that you can begin to collect SSA benefits anytime between your 62nd and 70th birthdays. Thus, you could enter a different year to begin collecting your benefits in the estimator tool and see “what” happens to your monthly benefit.
A CFPB study shows that the SSA system provides benefits to nearly nine out of 10 Americans aged 65 or older. Approximately two-thirds of the nearly 40 million recipients depend on it for 50% or more of their retirement income. SSA benefits are particularly important for the growing number of beneficiaries aged 80 and older. For this age group, SSA benefits account for 70% or more of their income.
The CFPB, to help senior citizens, has added an estimator tool on its website which can be found by Clicking Here.
As Ms. Mitchell at the Wharton School said, this may be the most important financial decision that you ever make. Accordingly, use the various tools found on secured Internet sites to estimate your benefits, but you also need to consult with your financial advisor and tax professional before making this decision.
If you want to discuss your business or personal tax planning and tax preparation concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.
