Posted on 08/02/2018 9:22:46 AM PDT by Red Badger
Social Security benefits can be claimed at any point after a recipient turns age 62, and most Americans take their Social Security as soon as they can. Claiming benefits early can be smart, but it can pay off to wait. If you're deciding when to start receiving Social Security, here's what to consider. Estimate your expenses
Retirement usually means a big drop in income, and if you don't have a solid grasp on what your spending is going to look like in retirement, then you won't be able to make the best decision on when to claim.
Depending on who you talk to, experts usually recommend budgeting for 70% to 80% of your pre-retirement income to cover expenses in retirement. However, the exact amount you'll need depends on your specific situation.
According to the Bureau of Labor Statistics (BLS), retirees spend the most money on home mortgages and auto loans, so if those loans won't be paid off when you retire, you'll need to budget accordingly. Overall, the BLS reports that the average 65-plus household spends about $45,221 per year, and housing and transportation account for $15,711 and $6,830 per year, respectively.
Healthcare is another big expense in retirement, and it's usually smart to over-budget when it comes to planning for those expenses. If you're healthy, your costs might not increase significantly at first, but you'll likely require more healthcare as you get older, and that healthcare won't be cheap. Healthcare spending in over-65 households totals $5,877 per year, according to the BLS, including $4,029 for health insurance and another $694 for medicine. Fidelity Investments estimates that a couple retiring at 65 this year will fork out over $275,000 in healthcare expenses during their retirement, and ultimately, the tally could be tens of thousands of dollars higher than that if you need long-term care at some point, too. Social Security options
If you've paid into Social Security over a career lasting at least 10 years, there's a good chance you'll qualify for benefits.
You can claim your benefits when you turn 62, but you'll receive a reduced payment. If you go the claim-early route, apply three months before you turn 62, so that you can receive your first check in the month after you turn 62.
If you want to receive 100% of the benefit you're eligible for, you'll need to wait until you reach your full retirement age to claim. Your full retirement age depends on the year in which you were born, but for people turning 62 in 2018, it is 66 years and 4 months.
Your third option is to wait until after your full retirement age to claim so that you can receive delayed retirement credits. These credits increase your payment for every month beyond your full retirement age that you delay. Overall, delaying increases your benefit by 8% for every year you hold off, until age 70.
The following chart shows how much a Social Security recipient would receive if their full retirement age is 66, their benefit is $1,000, and they chose to claim benefits between age 62 and age 70.
Data source: Author's calculations.
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While this example shows how benefits change depending on when you claim, the exact amount you'll receive in benefits is determined by a complex calculation based on your highest 35 years of earnings.
You can create a login here to view your actual Social Security benefit, but the average monthly Social Security check is $1,404 in 2018, and the average check paid to recipients age 62, age 66, or age 70 last year was $1,112.30, $1,382.78, and $1,510.49, respectively.
Once you know your expected Social Security income at age 62, age 66, and age 70 add to it any other sources of retirement income you'll receive, such as pensions and investment income. If you've thoroughly calculated your projected retirement expenses, then you should be able to use these numbers to determine the age at which you can reasonably expect to afford to retire. Important considerations
If you have ample income in retirement from other sources, it might make the most sense to embrace a claim-early and-invest strategy. As you can see in the following chart, waiting to claim benefits doesn't break even with taking benefits early until you reach your late 70s or early 80s, depending on when you claim. But if you claim benefits early and then invest that income, you could conceivably push that breakeven point back even further, depending on your annual returns.
Data source: Author's calculations.
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It's also important to consider the impact of claiming decisions on your spouse's financial security after your death. If your widow and widower is full retirement age, they can receive 100% of your benefit amount after you pass away, but only up to what you would otherwise be receiving if you were still alive. Therefore, if you claim early and receive a smaller monthly benefit, it may not be enough money for your surviving spouse to maintain his or her lifestyle.
If you're working in a high-paying job (relative to what you earned early on in your career), you might want to delay claiming your benefit anyway. If you've already accumulated a 35-year work history, additional high-earning years will replace lower-earning years in your benefit calculation, thereby giving your full retirement age benefit a boost.
Furthermore, if you plan on working into your early 60s, then you should know that if your income exceeds limits, the IRS will tax some of your Social Security until you reach your full retirement age. In those cases, delaying when you claim so that you lower your income taxes might be a smart choice.
Overall, when to claim your Social Security benefits is one of the most complex, and important, choices you'll face leading up to retirement, so make sure you understand the various retirement strategies available to you.
Yep next time the D’s are in control of House, Senate and President . . . they will implement means testing.
If you are drawing Social Security when you turn 65, they will also take $120 or so out of your check every month for Medicare Part B (outpatient care) unless you specifically decline it.
I receive my medical care at the VA so I don't feel I need the Medicare Part B outpatient coverage.
So I rejected the Part B when I turned 65, got a new card issued for Part A only and saved the $120 a month.
If you never draw SS, your will still get Medicare Part A by default (turning 65). You don't have a choice but it is free so not to worry.
Check your gene pool. If you relatives did not live beyond 66 or even 70 take it ASAP.
One thing to do regardless is to retire debt-free. Without debt (and hopefully with a nice retirement account and/or pension) I hope to live on the SS, roll over my IRA/401k's (slowly to minimize taxes) to Roth's, and (Lord willing) leave a nice inheritance to the kids/grandkids (Thank you Dave Ramsey!).
That or spend it all on riotous living and die penniless...
My wife is considerably younger than I am, so it looks like it makes the most sense for me to take at 70, so that she gets a full allotment after I eventually pass on.
I did. Uncles and aunts ages at death:
72, 77, 76......
She only gets 50%..........
When does welfare reach insolvency?
If you take it at sixty two.
SS and Medicare are two separate programs and you can take one without taking the other.
Medicare you have to join at 65. There is no other option and if you do not sign up at the right time there will be penalties and interest.
My mom was out of the country when she turned 65 and her employer had health insurance on her. When she came back to the states at 67 she was threatened with all sorts of financial penalties for not having signed up at the proper time even though it would have been impossible for her to sign up based on where they were assigned.
Her employer had to threaten to hire a lawyer to get them to back down.
The feds have said that if you're drawing it already, your monthly benefits will not be reduced.
62. There is no guarantee you will live to collect it all so start as soon as you can.
You were supposed to be dead at 57 years and your wife at 62. Then came Penicillin.
Course, if you way you may not make it.
Depends on if you would rather take the benefit and infest the money yourself or if you count on living long enough.
Yes, my friend’s mom had to sign up and I believe they deduct just over $200 per month for this. She told me this is mandatory.
Withholding is voluntary, so as a default, no withholding is taken from a retirement SS check.
I wanted withholding.
I couldn’t do it online. I had to go to an SS office and file the paperwork.
I am waiting until 70 (66 and about to retire now) because:
—Both my parents are still alive (excellent genes)
—I am in excellent health and good shape
—I make a lot more than my wife so I want to maximize her benefits, particularly if I die first
—I can afford to do it and still cover expenses.
Your mileage may vary..
I’m taking mine at 62; four short years! I have healthcare through the VA, and I can still work from home and earn up to $17,040.00 and not lose a penny. (2018 figure; I’m figuring it’ll go up.) I’ll let my IRA $ ‘cook’ until I HAVE to touch it when I’m in my 70’s.
At this point I’m waiting to see if I’ll take mine, or the Ex-husband’s, whichever is more. He had some VERY high earning years when we were married...before he flushed his life down the cr@pper. :(
That’s the plan, anyway. Life LOVES to throw you a curve-ball once you have it all planned out. ;)
So how much is it that you can earn without having to give any back?
No, you sign up for Medicare when you’re 65, regardless of when you take SS.
Do you have to sign up for Medicare when you sign up for Social Security?
When I began to receive Social Security I was covered by my wife’s insurance. So I did not sign up for Medicare.
When my wife retired I had to go to the social security office and explain why I was not already signed up and got signed up at that time.
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