At What Age Should You Take Social Security?


By: John M. Campanola, Agent New York Life Insurance Company Special to the Boca and Delray newspapers

When it comes to Social Security payouts, the “when” can be as important as the “how much.” Americans in retirement, or nearing it, have multiple options on when to start collecting Social Security benefits. The attractiveness of each option depends on a myriad of factors, including income need, health, and career/retirement status.

Make no mistake; there’s an abundant amount of cash on the table with Social Security. According to the U.S. Social Security Administration, approximately 62 million Americans will take $955 billion in Social Security benefits in 2017.

But not all Americans will take Social Security at the same age, and for good reasons. Here are three common scenarios for when Americans start withdrawing money:

Scenario 1 (age 62): Starting Social Security payouts at age 62 makes sense for someone who is no longer working and has limited retirement resources. That person, like many Americans, may not have a traditional pension, and his or her 401(k) may not be sufficient to provide for retirement needs. Consequently, for Americans who have few options for gaining paid employment, starting Social Security at age 62 is often necessary to make ends meet.

Scenario 2 (full retirement age): There is a strong financial argument for waiting until full retirement age (currently age 66) to take Social Security benefits. (Full retirement age rises gradually for those born from 1955 to 1959, and it is age 67 for those born in 1960 or later.) If you are eligible to receive $750 a month at age 62 (the year recipients are initially eligible to collect Social Security) but wait until your full retirement age of age 66, you would receive $1,000 a month. Under the same scenario, someone who begins collecting at age 62 would receive $3,000 less each year than the person who waits until age 66. (But the person who began collecting early would have received $36,000 in benefits by the time he or she reached full retirement age.)

Scenario 3 (age 70): Delaying Social Security until age 70 makes sense for individuals who plan to keep working until age 70 or have resources they can utilize in their early retirement years. Recipients should know that for each year they delay retirement (up until age 70), their Social Security payments will increase.

The benefit grows over the years before you start collecting Social Security, and if you wait you get a small additional bonus, since a portion of the larger Social Security payment is not taxed when you start receiving the benefit. Additionally, for married couples, the larger benefit can serve as an inflation-adjusted income stream for the rest of their lives.

Make sure you consult with a financial professional before you make your final decision. Your financial situation is unique, and a trained money management professional can help you determine the best time to begin taking Social Security payments.

This educational third-party article is provided as a courtesy by John M. Campanola, Agent, New York Life Insurance Company. To learn more about the information or topics discussed, please contact John M. Campanola at 561-642-5180. Neither New York Life Insurance Company nor its Agents or affiliates provide tax or legal advice. Consult your legal or tax advisor to find out whether the concepts in this essay apply to your personal circumstances.