When Do I Start Taking Social Security?

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Should you retire now and begin collecting your benefits, or hold off for a few more years?

Did you know that you don’t have to wait until you’re 67 to start collecting Social Security benefits? That’s right! You can actually start as early as 62, though there are a few things to consider before making that decision.

So, when is the best time to start collecting your benefits? Well, that depends on your personal financial situation and other sources of retirement income. Let’s dive a bit deeper into how benefits are calculated and what factors you should consider when making this choice.

First, the Social Security Administration calculates your benefits based on your average monthly earnings from up to 35 years of your working life. They consider income up to the “taxable maximum” amount, which is $160,200 for 2023. They choose the years with the highest earnings, taking inflation into account, and then divide the total earnings by the number of months worked. This gives you your “average indexed monthly earnings,” which is used to determine your monthly benefit.

If you’re married or have an ex-spouse who’s contributed to Social Security, you might be able to claim part of their benefits, either as a spousal share or based on your own work history – whichever amount is greater.

Now, you can start taking benefits at age 62, but this means you’ll receive a smaller amount than if you wait until your Full Retirement Age (FRA). There’s no one-size-fits-all answer to when you should start collecting benefits; it’s really about when you want to retire and when you can afford to do so.

When deciding when to retire, consider your lifestyle, where you plan to live, and your health. If you have a chronic illness, for instance, you may choose to retire and collect benefits earlier. If Social Security is your main source of income during retirement, it might be better to wait and claim benefits later, giving you more money each month and more time to save.

Keep in mind that if you retire early, your benefits will be reduced for each month before your FRA. For example, if you were born in 1960 or later and retire at 62 with a retirement benefit of $1,000, your monthly payment would be reduced to $700 – a 30% reduction. But hey, that’s still $700 a month you wouldn’t have received otherwise!

Lastly, remember that managing your spending and withdrawal rates during retirement is crucial to ensure you don’t outlive your assets. Cutting back on expenses like travel, especially during market downturns or high inflation, can help make your retirement savings last longer.

In conclusion, there’s no “perfect” time to start collecting Social Security benefits – it all depends on your individual circumstances. So, take some time to carefully consider your financial situation and retirement goals before making this important decision.

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