If you’re nearing the age of 62, you would greatly benefit by doing some homework to figure out what Social Security choices are available. Having choices seems like a great option; however, navigating Social Security language and determining the best selections can be overwhelming. To help you avoid costly mistakes that could possibly result in collecting less than you would over your lifetime, consider the following topics.
The Big Question – At what age should you begin collecting benefits? – Full benefits are available at ages 65-67 depending on the year that you were born. Click Here to see your full benefit age. At the age of 62, anyone collecting Social Security retirement benefits can start receiving a “reduced” amount. However, this may not be in your best interest if you find yourself outliving your retirement savings and living on minimal income. You can use a life expectancy calculator which may or may not be accurate. The goal here should be to collect the largest sum possible while reducing the risk of depleting your retirement savings. The best incentive to wait is knowing that you cannot outlive your Social Security benefits as they will continue to arrive if you’re alive to receive them.
As a bonus, if you delay Social Security past your full retirement age, you will receive an 8 percent boost in benefits for every year you hold off, up until age 70.
Maximize your benefits – Benefits are based on your 35 highest years of earnings, working a full 35 years will maximize your benefits. If you worked for 10 years, you would qualify for benefits, but they would be a fraction of what they could be had you worked for 35 years.
Maximize your earnings – By paying more taxes into the system (up to the tax cap of $132,900 in 2019) you will get a bigger payout in retirement.
Don’t take the six months’ lump sum payout – The Social Security Administration is offering this six-month bonus to those who agree to start benefits immediately. This may be enticing to those short on funds, but gaining this bonus will lower your income level back six months and quite possibly cause you to pay taxes on your bonus income. This option is available to those who apply for benefits six months or longer after they become eligible.
You can suspend your benefits – If you believe you started taking your benefits too soon, you still have the right to suspend your benefits before you reach age 70, by doing so the amount of money you receive will increase when you restart them later.
These are just a few topics to consider before you begin taking your social security benefits. For more information go to SocialSecurity.gov where you can find answers to all your questions.
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