When should I receive my social security benefits?
This is a very complicated issue and you need to consider some assumptions and calculations. A blog post is unlikely to cover all the incidents of this issue. So we won't tell you exactly when you should receive social security benefits. What we're going to do is look at the various factors that can be considered in your decision making process, and then we'll link to some useful resources that can help you make this decision.
First, as you can see, social security benefits can vary greatly depending on when you start receiving benefits. As I mentioned before, this difference in welfare is not meant to prevent you from retire early.
The difference in the amount of benefits means that they tend to balance over time. In theory, “ordinary Americans” will receive the same amount of social security benefits in their lifetime, whether he or she starts receiving benefits from the age of 62 or wait until the age of 70. If you wait to receive benefits later, you only need to pay more money each month to make up for the lost time.
Depending on when you decide to receive social security benefits, it is not difficult to calculate how much you can get for each month's check. But this does not make it easier for you to decide when to enjoy benefits is best for you.
How much did you save?
When you decide to take a check, your retirement savings should be affordable. Many financial experts, including Charles Schwab's financial experts, suggest that if you can live on retirement savings in the years before retirement, you will be delayed from receiving social security. But you don't want to spend money, so you can only live on a meager social security fund in the future.
No matter how much your retirement savings are, you need to do some fine calculations. You may need a qualified financial planner to complete these calculations. You really can't say without hesitation whether you should use social insurance first or use retirement savings right away.
How long will you live?
We don't like to think about death and life expectancy, but these are important in social security calculations. Remember, social security payments are based on average life expectancy, which is about 77 years old. So, whether you are paying in advance or deferred, if you live to 77, you will get the same money.
However, if your life is much older than 77, over time, you will get more money, delay your payment, and wait for a bigger monthly check. On the other hand, if you die before the age of 77, then in the long run, accepting small payments in advance will give you even greater returns. If your health or family history suggests that you may not be 77 years old, you may consider receiving social insurance in advance. However, if you expect to live to a mature age of 90 or older, then postponing your check may be the best option.
The chart below shows your balance of payments age, if you live after this age, you will go ahead. The longer you wait for social insurance, the sooner you reach the age of break-even.
If you are married?
If you are married, you will find a way to maximize your social security income as a couple. Here are a few options: File a claim and suspend it. If one party's income is much higher than the other, and the other party with the higher income wants to continue working, the party can receive benefits at the full retirement age and stop the payment indefinitely. Spouses with lower incomes can receive 50% of spouse benefits. This means that the couple will receive a stable social security check, but the suspended payment of the higher-income spouse will increase the spouse's social security benefits over time.
Claim twice. If the couple have similar incomes in their lifetime, they can start with low income and then increase social security spending. In this case, both spouses retired, one enjoys regular social security benefits, and the other enjoys smaller spouse benefits. Later, the second spouse can withdraw from his or her social security benefits. As a result, the couple received 50% more benefits than a spouse before retirement, and the second social security check they received after retirement was much higher.
Survivor benefits. It is also important to think about what happens if one of you dies and the surviving spouse. Receiving social insurance after retirement will increase the spouse’s monthly benefits, so this is usually a good idea.
If you keep working ...
In some cases, if you continue to work for greater benefit, it is best to postpone receiving benefits. If you are hesitant to receive benefits in advance at the age of 62 and you are still working, it is usually best to postpone at least until you reach retirement age. If the market is good for you, you can receive social security payments at work and get a better return on your investment. As long as you invest in social security checks every month, you may get better returns in the long run.
The problem with this strategy is that it depends on a volatile market. If you don't get a good return, or if your investment loses money, you will receive social security payments and you will enjoy a smaller welfare check for the rest of your life. If you can't afford to lose, this may not be your best choice.
But that doesn't necessarily mean you shouldn't enjoy your benefits at work. Remember, if you earn more than $15,120 (at least in 2013) while receiving social security benefits, your benefits will now decrease, but once you reach retirement age or stop working, benefits will increase. As mentioned earlier, if you wait for social security payments to the retirement age, the added benefits may still be smaller than your benefits.
Once you reach the full retirement age, you can continue to work for any amount of money while still extracting your full, standard social security benefits. However, you may still have to postpone the application for social security checks, because the monthly benefits will continue to grow as you postpone the monthly increase in social security until your 70th birthday.
First, as you can see, social security benefits can vary greatly depending on when you start receiving benefits. As I mentioned before, this difference in welfare is not meant to prevent you from retire early.
The difference in the amount of benefits means that they tend to balance over time. In theory, “ordinary Americans” will receive the same amount of social security benefits in their lifetime, whether he or she starts receiving benefits from the age of 62 or wait until the age of 70. If you wait to receive benefits later, you only need to pay more money each month to make up for the lost time.
Depending on when you decide to receive social security benefits, it is not difficult to calculate how much you can get for each month's check. But this does not make it easier for you to decide when to enjoy benefits is best for you.
How much did you save?
When you decide to take a check, your retirement savings should be affordable. Many financial experts, including Charles Schwab's financial experts, suggest that if you can live on retirement savings in the years before retirement, you will be delayed from receiving social security. But you don't want to spend money, so you can only live on a meager social security fund in the future.
No matter how much your retirement savings are, you need to do some fine calculations. You may need a qualified financial planner to complete these calculations. You really can't say without hesitation whether you should use social insurance first or use retirement savings right away.
How long will you live?
We don't like to think about death and life expectancy, but these are important in social security calculations. Remember, social security payments are based on average life expectancy, which is about 77 years old. So, whether you are paying in advance or deferred, if you live to 77, you will get the same money.
However, if your life is much older than 77, over time, you will get more money, delay your payment, and wait for a bigger monthly check. On the other hand, if you die before the age of 77, then in the long run, accepting small payments in advance will give you even greater returns. If your health or family history suggests that you may not be 77 years old, you may consider receiving social insurance in advance. However, if you expect to live to a mature age of 90 or older, then postponing your check may be the best option.
The chart below shows your balance of payments age, if you live after this age, you will go ahead. The longer you wait for social insurance, the sooner you reach the age of break-even.
If you are married?
If you are married, you will find a way to maximize your social security income as a couple. Here are a few options: File a claim and suspend it. If one party's income is much higher than the other, and the other party with the higher income wants to continue working, the party can receive benefits at the full retirement age and stop the payment indefinitely. Spouses with lower incomes can receive 50% of spouse benefits. This means that the couple will receive a stable social security check, but the suspended payment of the higher-income spouse will increase the spouse's social security benefits over time.
Claim twice. If the couple have similar incomes in their lifetime, they can start with low income and then increase social security spending. In this case, both spouses retired, one enjoys regular social security benefits, and the other enjoys smaller spouse benefits. Later, the second spouse can withdraw from his or her social security benefits. As a result, the couple received 50% more benefits than a spouse before retirement, and the second social security check they received after retirement was much higher.
Survivor benefits. It is also important to think about what happens if one of you dies and the surviving spouse. Receiving social insurance after retirement will increase the spouse’s monthly benefits, so this is usually a good idea.
If you keep working ...
In some cases, if you continue to work for greater benefit, it is best to postpone receiving benefits. If you are hesitant to receive benefits in advance at the age of 62 and you are still working, it is usually best to postpone at least until you reach retirement age. If the market is good for you, you can receive social security payments at work and get a better return on your investment. As long as you invest in social security checks every month, you may get better returns in the long run.
The problem with this strategy is that it depends on a volatile market. If you don't get a good return, or if your investment loses money, you will receive social security payments and you will enjoy a smaller welfare check for the rest of your life. If you can't afford to lose, this may not be your best choice.
But that doesn't necessarily mean you shouldn't enjoy your benefits at work. Remember, if you earn more than $15,120 (at least in 2013) while receiving social security benefits, your benefits will now decrease, but once you reach retirement age or stop working, benefits will increase. As mentioned earlier, if you wait for social security payments to the retirement age, the added benefits may still be smaller than your benefits.
Once you reach the full retirement age, you can continue to work for any amount of money while still extracting your full, standard social security benefits. However, you may still have to postpone the application for social security checks, because the monthly benefits will continue to grow as you postpone the monthly increase in social security until your 70th birthday.