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When is the Best Time to Withdraw Your Social Security Benefits?

You’ve worked for as long as you can remember.

Taxes and benefits were withheld from your paychecks in order for you to pay into a system that you’d be able to use later in life. What’s this system that you’ve been paying into – without much of a choice?

Social Security.

With all of the money that you’ve invested into this system, when would be the best time for you to withdraw your Social Security benefits? Here are a few questions to consider when thinking about whether or not it’s the right time to withdraw from Social Security.

Will My Age Play a Factor?

Let’s get this out in the open.

Once you turn 62-years-old, you’re eligible to begin receiving Social Security benefits.

But just because you’ve finally reached that eligibility age, doesn’t mean you should immediately begin to withdraw your Social Security benefits.

Here’s something to think about.

Once you reach 62-years-of-age, the monthly benefit you’ll receive from Social Security will be decreased by 30% (give or take).

The longer you wait to withdraw from your Social Security, the less of a percentage will be reduced from your monthly benefit; allowing you to receive the maximum benefit amount per month.

If 1960 was your birth year, your full retirement age would be at 67-years-old; allowing you to receive the maximum Social Security benefit amount.

Here’s a breakdown of monthly percentage deductions to expect, per month, based on your age:

  • 63-years-old – Approximately 25%
  • 64-years-old – Approximately 20%
  • 65-years-old – Approximately 13.3%
  • 66-years-old – Approximately 6.7%

SOURCE: Benefits Planner: Retirement | Born in 1960

As you can see from the above information, the longer you wait, the monthly benefit that you receive from Social Security will increase.

But wait; there’s a perk that comes with waiting to file for your Social Security benefits.

Think about this; you’re eligible for Medicare at the age of 65. Why not wait until you’re at least 65-years-old when your additional health care benefit (Medicare) kicks in?

If you’re 65-years-of age and are eligible to receive Social Security benefits, but have yet filed to collect, you’ll be eligible for Medicare Part A – without having to pay premiums out-of-pocket.

Who is eligible for Medicare?

Even though there are some obvious benefits to waiting to withdraw from your Social Security benefits, waiting to do so may not be in everyone’s best interest.

You may not have enough in savings to live off of, or your monthly expenses may exceed the amount of your monthly Social Security benefit. If that’s the case, you may have to withdraw from your Social Security early, or look to additional options.

Should You Continue to Work?

Are you planning to continue to work and collect Social Security benefits early?

If so, plan for a reduction in your monthly
benefits
.

But there’s an upside to working while collecting Social Security.

If you decide to work while collecting your Social Security benefits, you’ll have a steady stream of income coming into your household, which will allow you to use your monthly Social Security benefits as “disposable” (extra) income.

This is an amazing opportunity, as this will provide you with an additional money flow in which you can decide what you wish to do with your money outside of your normal everyday expenses.

Would you like to invest those funds? Or maybe you’d like to start a trust for your grandchildren? Does your savings account need a boost?

Instead of living off of Social Security alone, or a savings account, working gives you the flexibility to still supplement your lifestyle while not being solely reliant on your monthly Social Security benefits.

For example, you may work at a job and make about $2,000 every two weeks. However, your monthly Social Security benefits may be a little more than that amount. Why not use your bi-weekly paycheck to cover all household expenses, then use your Social Security as a part of your savings for an investment property that’ll lead to residual income?

It’s all about thinking forward and making your money work for you.

Does Longevity Run in Your Family?

For you, it may not be advantageous to wait until you’re even more of age to collect Social Security benefits.

Are you in poor health?

How many times have you visited the doctor’s office within the past year?

What’s your family history like when it comes to certain diseases and ailments?

These are things you have to consider before deciding whether or not to collect on your Social Security benefits after turning 62-years-old.

If you have a history in your family of people living to be over 70-years-old and above, it may be beneficial for you to wait to collect your Social Security benefits. With that kind of family history, it would allow you to receive an increase in your monthly Social Security benefit – as there would be less of a percentage being withheld.

Plus, if you happen to outlive your retirement income (from working consistently for years), you’ll have a little extra stashed away to keep you going since your Social Security benefits are more than what you would’ve received had you filed earlier for your benefits.

If you don’t have a history of longevity in your family, or if your family is peppered with varying health problems, you may make the decision to withdraw from your Social Security early in order to assist with any financial healthcare burdens that have racked-up through the years.

What Will You Decide?

The choice to decide when’s the best time to withdraw your Social Security benefits are entirely up to you. It’s a decision that shouldn’t be made lightly. However, there are multiple factors to consider, such as your age, employment, and longevity.

Whatever you decide based on your personal circumstances, make sure that it makes sense, works in your best interest, and will have positive effects for you and your family.

Additional Resources

Have additional questions on how to calculate what you’d receive if you file for your Social Security benefits at a certain age?

Here are some Social Security retirement calculators that can aid in your decision as to whether or not it’s the right time for you to withdraw your Social Security benefits.

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