Social Security at 62, 66, or 70? How do you decide?

When to take Social Security?Our recent post on Social Security noted that about one-third of all people claim benefits at age 62.  In an age where the future of Social Security is uncertain and the subject of constant political debate, claiming benefits as early as possible and taking everything you are entitled to feels like a valid strategy.

However, unless you have serious health or longevity concerns, claiming benefits early can permanently reduce your lifetime income and eat away at your purchasing power over time.

Age Matters When Claiming Social Security

The following article from Investments News has great information about the age you claim benefits: Age matters in Social Security claiming strategies

One of the most important notes in the article is that this permanent reduction in benefits applies to spousal benefits too:

“A spousal benefit is worth 50% of the worker’s benefit if collected at full retirement age and less if collected earlier. A spousal benefit collected at 62 would be worth just 35% of the worker’s primary insurance amount.

If the wife has earnings on her own record, Social Security will pay her own retirement benefit first, reduced for early claiming. And if the spousal benefit is larger, her benefit would be topped off to bring it up to the spousal amount, also reduced for early claiming.”

While waiting to claim benefits will typically result in higher lifetime benefits, in many cases, cash flow constraints may make waiting a luxury you can’t afford to take.

A comprehensive financial plan can help determine the best social security claiming strategy for your personal financial situation.

Photo credit: Flickr – Will Clayton

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