When is the best time to take social security
This is a question we hear often and the truth is, there is no perfect time. You hear lots of people talking about how to maximize Social Security and run reports on the best time to take it, but the truth is most of the strategies that were once available are no longer available for most. Simply put, the longer you wait, the higher the monthly benefit, but is waiting always the best? Not necessarily. Taking social security, like many parts of a retirement plan, need to be part of an overall plan.
Let’s look at three questions that need to be answered to help you determine what is right for you.
When do you need or want to retire?
If your Dreams for retirement start with you retiring at 62 (or whenever), then there is nothing wrong with taking social security then. The decision to take social security or delay at that point needs to be made considering your full retirement income plan.
What other income will you have?
Most retirement income plans include income from multiple sources such as pensions, investment income, wages from part-time work, rental or other income and social security. There are many factors that go into a retirement income plan when to take social security should always be part of the planning process. You will need to consider the benefits of waiting vs. the benefits of taking early based on your income plan: Will you make over the limit before full retirement and have your social security benefits reduced? Do you have sufficient income from other sources to delay? Will delaying cause greater taxes? A retirement advisor should take all of those questions into consideration when creating you a retirement income plan.
In what way do you want to rely on the government for your retirement income?
Delay social security will result in a higher monthly benefit and in turn, greater cost of living increases. But the same can be true for your other retirement accounts if managed or invested to maximize retirement income. The question then becomes which accounts do you want to delay? Do you trust the government to be able to increase your benefits for the cost of living each year or do you trust your personal retirement plan and your advisor to lead you?
Bottom line, the social security decision should not be made on an island, but as part of an overall retirement income plan, there is no magic formula or perfect time.