When Should I Take Social Security?
That’s a question we hear often, and you may not like the answer so much. My answer is it depends.
When I say that, I often think of my kids where they ask me something all the time and the answer is often maybe.
“Mom, can we go here?” “Mom, can I do this one?” Asking something all the time where my answer often is maybe. We’ll see what the day brings. We’ll see if you get your work done. We’ll see if you listen. Maybe is dependent upon what they do.
When we go to take social security, it depends is very much like the maybe answer. It depends on when you retire. What are your goals? There is no one perfect time that I can say that everybody should take social security.
Should I Delay Taking Social Security?
Going back to my kids and our society, we often think that by this point, age 5 or 6, kids should be reading. Well, the fact is some kids read it for some kids aren’t ready to read until seven or eight. It really depends on the kid. The important thing is to make sure they learn and enjoy reading, but not try to put them in a box and think they all have to learn at the same speed and in the same way.
The same thing is true with social security. If I tried to say, everybody should take it at this time, it’s going to be wrong. There are going to be people that need to take it earlier. There’s going to be people that take it later. There is no perfect time. So let’s go into how this, “it depends” answer works when it comes to taking social security.
How Do I Maximize My Social Security?
First of all, you can start taking social security as early as 62. You can delay it up until 70. Somewhere between 66 or 67 is what’s considered your full retirement age. That’s important for a couple of reasons. If you take benefits before your full retirement age, of course, you’re getting less than your benefit would be at full retirement. If you wait until later, you get more than, but there’s really something else. If you take social security before full retirement and you’re working, they end up taking a lot back if you make over $17,000 a year. After your full retirement age, you can take social security and make as much as you want. with no additional “penalties” based on what you make.
So the only thing that really is key in the full retirement age, in our opinion, when it comes to determining when you take social security is if you’re working or not.
Say you retire at 63 or 64, for whatever reason, you wanted to or maybe you had to for health, or because you lost a job, whatever… When you retire, and you do not plan on going back to work, normally we say to start social security.
Social Security and Retirement Income
Even if you work to full retirement, there are some people who say to wait until 70 because social security is going to be so much higher and so much better. But we usually say to take it when you retire. Here’s why, if we look at the break-even point, meaning the point in time where we have received the same amount in social security regardless of the age we take it, it’s all about the same breakeven age of around 78.
So what that means is if you live longer than 78, and if you delayed your retirement, now you’re going to be getting more because you get more per month for longer and receive more from Social Security. Exactly how much better that is for your lifetime. I can’t tell you. And you can’t tell me unless you have a crystal ball and can look and see, and exactly how long you’re going to live.
Even if you could, there’s a flip side to that.
We were talking to someone the other day about this and going through these scenarios. If they delayed social security, they would end up taking $80,000 from their investments for income before they started Social Security.
So even though when social security starts, it is more per month, we lost that $80,000 and all future gains of that $80,000.
So when we take social security, yes, we get more income. We get it for as long as you’re living or a spouse can also keep the highest social security. But when you’re gone, there’s nothing left, there’s nothing for beneficiaries.
If I didn’t do that and I started social security earlier, I still have that $80,000 working for me, growing for my future. If something happens to me, my beneficiaries get that money.
So in all honesty there to try to compare the two on what gives you the most benefit forever is hard because you can’t tell you exactly how long you’re going to live and it’s hard for you to calculate the cost and how much that value you will lose from your accounts by taking income from there instead of Social Security.
Personally, I believe it’s better that you can do a better job with your investments and retirement income than the government can. We can do a better job with you, with our team, getting more growth that you have the control of and where if you want to take that lump sum, for any other reason besides retirement income, you can. With Social Security, we can never take a lump sum, only monthly income.
So when should you take social security? Well, it really depends. it depends a lot on when you retire. It also depends on your full income plan. Where is the rest of your income coming from? How is it coming? How does Social Security play that role? All those things kind of go into the equation of when to take social security. Just to delay it to get the most benefit from social security may not be the best option.
I know I might not have completely answered your question today and I’m sorry, but there’s no easy answer. Here’s what I would tell you. If you’re planning to retire and trying to figure out when to take social security, give us a call. Social Security needs to be part of your full income plan. You can also watch our video course, 4 Steps to Your Dream Retirement, and start your journey to creating an income plan. We’ll talk to you soon.
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