Money Matters: Waiting to collect social security can pay off

June 9, 2017 01:30

If you've paid into the Social Security system for at least ten years, you'll probably be able to collect some benefits at retirement. In an effort to ease the burden on the system where the number of older Americans continues to grow, Congress has built in a progression of benefits. If you begin accepting benefits at the minimum age of 62, you'll get less per month than if you wait until age 66. And if you wait all the way to age 70 to start, you'll get the maximum payout. But waiting until 70 may not make sense for everyone, because the break-even point between starting to receive benefits at 66 versus 70 won't come until your late 70s or early 80s. Depending on the work you do, your health, how long you anticipate living beyond retirement, and whether you'll be able to continue to invest after retirement, could affect your decision.

As The Motley Fool outlines, the average payout to people who start collecting benefits at age 62 is $1,077. By age 66 it's up to $1,333. And by age 70, it's $1482. The amount is based on a complex formula averaging your monthly income, adjusted for inflation over a period of up to 35 years of your working life. However, delaying collecting those benefits can really add up in the those four years. And there are tax consequences to accepting benefits at different ages, so it's worth doing your homework.

To help your viewers/readers/listeners learn more about Social Security and how choosing an age to retire can affect their monthly benefit and their longer-term financial future, talk with financial planners in your area. They can put together sample calculations based on income and age, and explain how different scenarios could play out. And they can explain how to estimate your future Social Security benefit and how it can fit into a broader plan for retirement.

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