When it comes to Social Security and retirement, you may have conflicting viewpoints: On the one side, you hope to start collecting your benefits as soon as you’re eligible—after all, it’s your hard-earned money. On the other side, you know that, if you wait, your monthly benefit amount will increase.
While it does make sense to wait as long as you can, Rob Arthur, First Vice President/Manager of the Federal Benefits Consulting Group, Wells Fargo Advisors, recommends you re-evaluate your situation every year in retirement before deciding whether to continue delaying getting benefits.
“If I try to convince a 62-year-old to wait until 70, I’ve lost my audience immediately,” Arthur says. “That’s why I believe so strongly in this year-by-year approach.”
One item you need for that annual retirement review: a current copy of your Social Security benefit estimate from ssa.gov. This provides personalized estimates of future benefits based on your real earnings and lets you see your latest statement and your earnings history.
Here, Arthur outlines a comparison of claiming now vs. later, and offers key considerations as you review your strategy each year.
Comparison: Claiming sooner vs. later
Let’s start with a hypothetical example: John Doe was born in 1960 and was earning $200,000 a year when he retired. He decided to start receiving Social Security benefits as soon as he became eligible at 62, or five years before he would receive full retirement benefits. His monthly benefit in today’s dollars is $2,106.
If he had delayed receiving benefits until he was 70, he’d receive $1,700 more a month, or $3,806. And he would make up for the eight-year delay in not taking any benefits in about 10 years. (And because one out of every four 65-year-olds today will live past age 90, according to the Social Security Administration1, the long-term benefit could be substantial.)
“Unlike personal assets, Social Security is unlimited,” he says. “As long as you’re alive, the checks should continue to come.”
Make wellness a deciding factor
Your health can play a big role in helping determine when you should start taking benefits. Do your loved ones live long lives, or has everyone succumbed to illness before age 65? “It’s not the most accurate indicator of what’s going to transpire in the future, but it can have some bearing,” Arthur says.
“If you’re in reasonably good health, that counsels in favor of waiting,” he continues. “If you’re in poor or guarded health, that counsels toward drawing benefits sooner rather than later.”