When it comes to financial decisions, few are as significant as determining when to begin collecting your Social Security benefits. Opt for early withdrawal and your monthly payments will be smaller, albeit you will receive them over a longer period. Conversely, electing to start later results in higher monthly payments, but for a shorter duration. The choice between starting early or delaying your benefits is a pivotal one. Let’s delve into the reasons favoring both options.

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Considering Early or Late Claiming of Social Security Benefits

Prior to exploring the advantages of claiming your benefits early or late, it’s crucial to comprehend the impact of this decision on the size of your benefits. Every individual has a designated “full retirement age” at which they become eligible to receive their full benefits, based on their work history. For most individuals and those born in 1960 or later, this age is set at 67.

Nevertheless, you can opt to begin receiving benefits as early as age 62 or delay until you turn 70. The table below illustrates the repercussions based on the timing of your claim:

Data source: Social Security Administration.

If, for example, your benefits at age 67 would amount to $2,000, commencing at age 62 would secure you $1,400, while delaying until 70 would yield $2,480. In annual figures, these equate to $24,000, $16,800, and $29,760, respectively.

Choosing to Take Social Security Benefits Early

Why might one opt for early benefits, such as at age 62 or 63? A primary rationale would be simply out of necessity for many Americans approaching retirement with inadequate financial resources. If this applies to you, initiating Social Security benefits early can be a prudent decision. Additionally, if you anticipate a shorter-than-average lifespan due to health concerns or family history, starting early with reduced payments could maximize your overall benefits from the program. It’s crucial to calculate your break-even age to make an informed decision.

Moreover, commencing Social Security early can foster the growth of your retirement accounts by reducing the need to tap into them prematurely. Crafting a detailed retirement plan encompassing your desired retirement income and income sources is advisable.

Reasons to Delay Social Security Benefits Until Age 70

Conversely, there are compelling arguments for postponing your benefits:

• If you are in sound financial standing and can afford to wait until age 70 to optimize your benefits.
• If you anticipate living longer than average.
• If you and your spouse are coordinating to maximize joint benefits, which can lead to substantial gains for the surviving spouse.
• A 2019 study revealed that waiting until age 70 maximizes retirement potential for 57% of adults.
• Delaying benefits results in larger payments and maximizes the impact of cost-of-living adjustments.

Since there is no universal age at which to claim Social Security benefits, a thoughtful evaluation of your circumstances is vital before making a decision.

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