When to begin making claims Choosing Social Security is a personal and significant retirement decision.
You may receive ten different answers if you ask ten different people at what age they think you should begin receiving Social Security benefits.
Some advise waiting until you are 65, 67, or even 70 years old, while others advise taking it when you are first eligible, which is at age 62.
Since the Social Security trust fund is scheduled to run out in 2033, it’s a sensitive subject, and the best course of action will genuinely rely on your particular circumstances.
There are a number of variables that can vary greatly from person to person, including age, taxes, break-even points, and the amount of benefits you and your spouse receive.
Although financial advisors cannot give a universally applicable recommendation, there are a few factors that everyone should take into account when figuring out the best age to maximize Social Security benefits.
View Social Security as an asset
The first step is to consider Social Security as an additional retirement asset. Similar to an IRA or 401(k) plan, Social Security offers a consistent income that can accumulate significantly over time.
For instance, you would receive $600,000 over the course of your lifetime if you began receiving benefits at age 62 and you are expected to earn $2,000 a month with an 87-year life expectancy. That is a substantial sum.
However, the longer you wait to file, the more you will receive in Social Security benefits. If you begin collecting Social Security at age 62, you can receive 80% more per year than if you wait until you are 70.
Not everyone should wait until they are 70, but if you approach your benefits the same way we do with an IRA, you can figure out when to start receiving them in order to maximize your lifetime earnings.
Remove emotion
The future of Social Security worries a lot of Americans. People who are 45 to 60 years old and getting close to retirement are concerned that Social Security won’t be there.
The Social Security trust fund is scheduled to run out in eight years, which is the source of their concerns. That deadline might be accelerated by more expenditure contained in President Trump’s most recent One Big Beautiful Bill.
Americans would only receive 77% of their benefits; this does not mean that Social Security payments would cease.
Keep your timeline unaffected by this ambiguity.
Although we cannot forecast it, we do not know what Social Security will look like in thirty years. You can make a bad decision for your circumstances if you decide on the spur of the moment to begin your benefits at age 62 because you’re afraid they won’t be accessible at age 70.
Even if we can’t be absolutely sure, Social Security will probably continue to exist in some capacity over the ensuing ten years. Put your feelings aside and consider your particular circumstance.
A financial advisor can figure out which of several possibilities is best for you. They can assist you in developing a retirement plan that is independent of Social Security if you would prefer to eliminate the anxiety associated with this asset’s availability. In this manner, you’re ready for a future in which the benefit may or may not exist.
Understand taxes
Every action we do involves paying taxes, and Social Security is no different. Although removing Social Security taxes was one of the Big Beautiful Bill’s objectives, it was never accomplished.
In other words, if your total provisional income exceeds $32,000 when filing jointly and $25,000 while filing as an individual, you may be required to pay taxes on up to 85% of your benefits. Approximately 50% of recipients pay taxes on their benefits.
Know how that tax affects you if you’re still employed while getting Social Security payments. We can’t predict the future, but there may come a time when taxes on those earnings are removed.
Consider your possible tax burden while making your choice, just as you would with Roth conversions and tax-deferred retirement assets. When taxes are finally removed, you can experience further, unanticipated advantages.
Accept the fact that there is a great deal of uncertainty around the future of Social Security. The time has come to develop a strategy that will enable you to make an informed choice regarding how to effectively use Social Security.
By figuring out what age is appropriate for your particular situation, a financial advisor can help you feel secure about your retirement plan and your financial future.
A Registered Investment Adviser, Impact Partnership Wealth, LLC (IPW), offers investment advice services and products. Legal or tax advice cannot be given by the firm, its agents, or representatives. Before making any decisions about purchases, people should get advice from a trained specialist. No official agency, including the U.S. government, is associated with or endorses Medalist Wealth Management. July 25, 4691669
Our contributing adviser, not the Kiplinger editorial team, wrote this piece and expressed its opinions. Advisor records are available through the SECor withFINRA.
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