Video: What is the best age to start drawing Social Security?

Hi there. This is Jeff Bowers, certified financial planner professional with Plan To Retire. Today, we're going to talk about what's the best age for you to begin receiving social security benefits. We're going to talk about a little bit of the rules behind when you can begin social security benefits, and then we'll talk about the advice that we provide our clients, and lastly, give you some potential action steps. First, with regards to the rules of when you can collect social security, you can collect social security anywhere between the ages of 62 to age 70. If you begin your benefits at age 62, you take a 25% permanent penalty off your primary insurance amount. Your primary insurance amount was the amount of benefit you would have received if you waited until your full retirement at age. Your full retirement age is currently determined by the year you were born. As an example, if you were born in 1954, you'd be turning 66 this year, and that's your full retirement age.

 

If someone waits till past their full retirement age to receive social security benefits, every year they wait, they get an 8% delayed retirement credit. Think about that as a permanent 8% increase in your benefit. You can do that all the way to age 70, so it's like getting a guaranteed 8% return for every year deferred from your full retirement age, up to age 70. Now, as an example of that, let's take an example of someone who would be turning 66 this year. That's their full retirement age. Let's say that the primary insurance amount was $2,000. Had they started receiving their benefit when they were 62, they would have received $1,500 per month. If however, they wait all the way to age 70, they would receive $2,640 per month. So, they get a big bump up in delaying their benefit. Another important point to consider is the survivor's benefits from social security.

 

Typically, when two people in a household, a husband and wife are receiving social security, they're receiving different dollar amounts. When the first spouse dies, the second spouse's benefit will step up, if that first spouse has benefit was higher than theirs, and the first spouse obviously pre-deceased them, so they would get a step up in their benefit. One of the reasons why you don't want to do a simple break-even analysis, if you're married, because you really need to take into account your joint life expectancy. Now, as a further example, according to the Social Security Administration for a couple today, that's aged 65, they have a better than 50-50 chance that one of those folks will live to be age 90. Let me give you some examples of cases we've seen in our practice. Recently, we've had a case of a gentlemen, 62, who worked a manual labor job, had some adverse health issues, and with, due to his finances and his health, he needed to start taking social security at age 62.

 

Another case recently, we had a gentleman, age 70. Had an office job, very good health, and his wife was substantially younger than him, so it made more sense for him to wait to receive his benefit all the way to age 70. Basic rule of thumb is, you don't want to take your social security until you need it, but need is defined by the individual and their individual financial circumstances. If you would like to have a more personal discussion about what's the appropriate age for you to begin receiving social security benefits, down description is going to be all linked to my calendar. Click that link, and we can schedule an introductory phone call and go over some of your needs. Second thing you could consider is hit the Subscribe button down below. That way you get future videos for content, just like this.