As many baby boomers reach or near retirement, one of the questions we are always asked about is what age should someone begin taking Social Security. The answer will truly lie in the details of your personal financial situation, but here are some key considerations to think about when making the decision.
First, you really want to consider whether or not you plan to work and earn a decent living past the age of 62. For 2009, the test applies if you make more than $14,160. And for every $2 you earn over that limit, you’ll lose $1 of benefits. Suppose you claim benefits at age 62 and your monthly benefit is $1,500 (and you estimate that you’ll earn $30,000 during the year). Because $30,000 is $15,840 over the limit, you would lose half of the excess, or $7,920, in benefits. This can be catastrophic if you don’t run the math. (Source: Social Security Administration)
Second, it matters whether or you are single or married. If you are married, there is a key consideration in looking at your ages, and when each spouse may begin to elect their benefits from social security. If one spouse can wait long enough, it may enhance the overall benefits for your family. Married couples should go through comprehensive analysis before making this decision.
A final consideration is to determine the longevity in your family history. If you choose to take at 62 vs. taking at 66, there is roughly a 12 year breakeven period (or the age of 78) before choosing the latter age will begin to work in your favor. If you wait until the age of 70 to take social security, then the breakeven point goes into your 80’s. However, if you don’t need the income, then you may be able to wait for the larger benefit as you plan your overall strategy for income in retirement. (Source: NY Times)
Breathe Easier® About Your Financial Future
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder oXYGen Financial, Inc.
oXYGen Financial, Inc. co-CEO Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.
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