You may not be thinking about Social Security for yourself yet, but if you, or someone you know, has reached age 50 or beyond, there are some things that you might want to consider before making your choices.
When can you receive your full social security benefits?
It used to be that everyone was eligible at age 65. Now, anyone born between 1938-1959 has to use the Social Security retirement age chart to find their exact retirement age. Why? Because in the early 1980’s they decided to increase the age to 67 but didn’t want to hold out on those close to retirement. Instead, they gradually increased the retirement age by tacking on an extra 2 months for each year by birth year.
Based on our birth years, my husband Dave can retire at age 66, but I need to wait until I’m 66 and 10 months. It finally evens out for those born after 1960 – they’re currently holding at age 67.
Of course, to qualify for Social Security you have to meet the required credits. If you work and pay taxes, you will earn social security credits (typically 4 credits per year worked). You need to work at least 10 years (40 credits) to receive your own retirement benefits. Other types of benefits are available depending on your circumstances.
What happens if you start early and take partial benefits?
During the holidays, a group of us were talking about social security and what age we planned to start taking benefits. The group consensus was to start with partial benefits at age 62. Yes, for some that makes sense, but not for everyone.
Consider this: If you take your benefits before your full retirement age, you’ll receive reduced benefits for life (by as much as 25% less). In addition, if you’re still working and collecting social security, you’ll have income limitations each year.
On the other hand, if you delay your benefits past your full retirement age, your benefits will increase both for delaying and by annual cost of living.
The bottom line: What your family and friends do may not be what is right for you. Our family conversation brought up some interesting questions. We decided to speak with one of our investment advisors to understand what was best for us. He had a novel option that worked really well for our situation. You see, the best choice for us wasn’t to take the benefits at 62… or to wait. When Dave turns 62, we’ll be using that advice to start our golden years in the best way possible.
Do your research and make a plan that is right for you and your family.
P.S. This important advice came courtesy of our readers. Thank you, Betsy!
Another bit of information is that a wife can collect on her husband (or visa versa) at age 62 and then collect on themselves at full retirement age and not have the reduced benefits for life.