Newspaper article Charleston Gazette Mail

SAVVY SENIOR ; When Does It Pay to Take Social Security Early?

Newspaper article Charleston Gazette Mail

SAVVY SENIOR ; When Does It Pay to Take Social Security Early?

Article excerpt

Dear Savvy Senior: I will turn 62 in a few months and am trying to decide when to start taking my Social Security retirement benefits. Almost everything I read on this topic tells me it's better to wait until my full retirement age or beyond. Is there ever a good reason to start early? - Ready to Retire Dear Ready: You're right! Most financial planners agree that waiting to take your Social Security retirement benefits is a smart financial move. Why? Because each month you defer, from your 62nd birthday to your 70th, your monthly benefits grow. That adds up to around 6 to 8 percent higher payments for every year you delay.

Yet despite the financial incentive to wait, most people (58 percent of men and 64 percent of women) claim their benefits before full retirement age, which is currently 66 for those born between 1943 and 1954.

But speeding up the clock isn't always a bad idea. Here are some scenarios where it may make sense for you to collect early.

* You need the money: If you're retired and don't have enough savings or a pension to cover your living expenses, you'll probably have to start early. But, if you decide to work, be aware of the earnings test.

If you claim Social Security benefits before full retirement age (and you don't reach 66 this year), you'll forfeit $1 for every $2 you earn over the earnings limit of $15,720 in 2016. It usually doesn't make sense to take benefits early if you're working, unless your income is below the earnings limit.

* You have poor health: Having a serious medical problem that is likely to shorten your life is another reason to start your benefits sooner rather than later.

Consider the "breakeven point - the age you need to reach to come out ahead by waiting to claim Social Security - is 78 for someone who claims at 62 versus waiting to 66. If you don't anticipate making it to 78, go ahead and claim early. …

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