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How to make the most of your Social Security benefits.

When should you start to collect Social Security? Five factors to consider.

For many retirees, Social Security provides a major source of monthly income. But should you start collecting benefits as soon as you’re eligible? The answer isn’t always straightforward — and it’s not the same for everyone. To receive the maximum benefit, it’s important to understand your options so you can make the best decision for your situation and goals.

First things first: are you eligible?

As a general rule, you’re eligible to receive Social Security benefits if you’ve worked at least 10 years and paid Social Security taxes during that time. You may also be eligible if you have a spouse who meets that requirement.
  1. Your age.

    The age you begin claiming benefits can potentially mean a difference of thousands of dollars over time. You can start collecting at age 62, but your benefits will be reduced for every month you claim before your full retirement age. (Determine your full retirement age here). On the other hand, for every month you wait to apply, your benefits will increase slightly until your full retirement age.

    For example: Let’s say your full retirement age is 67 and your full retirement benefit is $1,000 per month. If you claim at age 62, you’ll receive $700 per month. If you wait until age 70, you’ll earn delayed retirement credits and receive $1,240 per month.

    Sometimes waiting may not be the best option. Perhaps you need the income now, are unemployed or in poor health. On the other hand, if you enjoy working at a job you love and would like to keep working, then you may be able to delay claiming benefits to receive a higher amount.

  2. Other financial resources.

    The amount of retirement savings you’ve accumulated outside of Social Security can also impact when to start collecting benefits. If you have a sizeable nest egg to start drawing from, it might make sense to wait to claim Social Security for a larger check if your savings can cover your monthly expenses in retirement. On the other hand, if your savings are limited, you might need the income from Social Security sooner. Keep in mind that whatever benefit payment you start with will remain the same for life, with the exception of any cost-of-living adjustments or post-retirement employment (see below).

  3. Working during retirement.

    Let’s say you stop working and start collecting your retirement benefits. After a few years, you decide to go back to work. If you’re less than full retirement age and earn more than the annual limit set by Social Security ($17,640 in 2019), your benefits check may be reduced. This rule applies only if you’re younger than your full retirement age.

  4. Claiming spousal benefits.

    If one spouse did not work for at least 10 years, they may be able to claim a spousal benefit. In addition, married couples with at least 10 years of employment each can stagger the dates they start to maximize benefits. Consider having the lower income spouse claim benefits first so that the higher earning spouse’s benefits can continue to grow.

  5. Your long-term goals

    How do you plan to spend your time during retirement? Do you want to stop working completely? Are you looking forward to traveling or indulging in hobbies? As you think about how you’ll spend your days, consider your living costs, family needs, health history and any other anticipated spending during retirement.

    Consider the factors that give you the best quality of life and assess how your goals impact your expenses. This can help you determine whether it makes more sense to begin taking Social Security benefits at age 62 or wait to claim a larger benefit.

Stay informed as you plan your best strategy.

With many retirees relying on Social Security income to cover expenses, taking advantage of strategies to boost your benefit can be a smart financial move. Ultimately, it’s a personal decision that depends on multiple factors including individual needs, savings and expenses, and retirement goals.

For additional information, resources and the most up-to-date guidelines, visit the Social Security Administration website. If you have questions about planning and budgeting in retirement, contact a financial advisor who can offer additional solutions to help you keep your retirement goals on track.

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