As you inch closer to retirement, you may be wondering when is the right time to begin collecting Social Security benefits. Here’s something important to know: Although you have the option to start receiving payments as early as age 62, you can increase your benefit amount by taking payments later. Your Social Security benefit increases for every month you wait—up to age 70—but of course, waiting a few more years for a larger check also means you’ll receive fewer checks overall. How do you figure out the break-even point?
One way to eliminate the dozens of swirling questions is by plugging your information into a Social Security break-even calculator. These calculators may offer some guidance on choosing the best age to start taking your benefits.
Unfortunately, there isn’t a one-size-fits-all approach to claiming Social Security payments, and there are several things to consider before making your decision. For example, your gender makes a big difference, as women live longer than men on average and Social Security often covers a larger percentage of women’s retirement income.
You may also think about your past or current marriages—and whether you may qualify for more money based on your spouse’s work history. Your current health and life expectancy may also influence your choice.
Clearly, there are many factors at play—and it’s easy to get overwhelmed by so many “what if?” payment scenarios, and many calculators don’t include two key factors—a way to compare filing ages or account for inflation. But a new calculator from Social Security Intelligence that purports to address these shortcomings may be worth trying. According to the website, you can access it for free (for now), but you have to provide your name and email address to set up an account.
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While no calculator is a substitute for one-on-one advice from a financial advisor, using these kinds of tools is better than winging it and collecting payments without a plan.
You can learn more about the basics of Social Security benefits—including what factors may influence your payments—here. You may also visit the main Social Security website or call the department toll-free at (800) 772-1213.
