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When To Take Social Security?

One of the most controversial topics on Social Security is the decision that everyone must make about when to take Social Security. Should you take it at the earlier possible opportunity and accept a lower benefit or should you wait and let it grow to a larger amount? We’ll cover the pros and cons of each side in this article.

Ronald Regan’s administration changed the age to get your full Social Security benefit from age 65 gradually up to age 67. You need to find your Full Retirement Age in the chart below. That is the age at which you can get 100% of your benefit. This is your magic number to get your full benefit and to be able to work full time and earn as much as you want without your Social Security being reduced.

You paid FICA taxes out of your paycheck every week for your entire life. You paid in more than you are likely to ever get out. This is YOUR money, not a government handout. The amount you will receive is based on your 35 highest years of earnings, at what age you draw and what type of benefit you are drawing. If you draw off your own work history and you draw at your Full Retirement Age, you will get 100% of the amount the SSA comes up with. If you draw earlier, you will get a reduced amount.

How to start your benefits?

Social Security allows you to choose and choose you must. It will not start automatically! It’s the government and you can get different answers when you call three times in a row. Just call us if you get conflicting information and we can provide you proof of the correct answer.

How long does it take to get your benefits?

Call Social Security to file an application to start your benefits about 3 months before you want them to begin. It takes 60-90 days for them to begin. They can lose your application and supporting documents. If you are asked to FAX in documents, be sure to call and get confirmation that they received them, or you might find that they were misplaced and everything drags on. It’s the government. They are doing the best they can, but with them all working from home during COVID service has been less than perfect.

Is there are benefit to waiting past your Full Retirement Age?

Yes and No. You will technically get a higher monthly benefit, but you need to take into consideration how much you gave up waiting to draw at a later age. If your draw the average benefit, you’ll earn about $20,000 per year. If you wait 5 years so you can draw an extra $300 per month, that sounds attractive until you realize that you gave up $100,000 in the past 5 years. You’ll have to live a lot longer to recoup that lost money and many will never recoup it.

What happens if you work full time and draw Social Security at 62?

You can only work part time and earn about $22,320 in 2024 prior to your Full Retirement Age. If you draw the average amount (about $20,000 a year) at age 62 you should stay close to the annual earnings limit.. If you work full time and earn $40,000 for every $2 you go over the earnings limit, your benefit will be reduced by $1. Since your limit is about $20k and you earned $40k, that is $20k too much and your benefit will be reduced by ½, or $10k. The good news is that you will get that $10k back but NOT in a lump sum check. Starting at your Full Retirement Age, you’ll get that money factored back into your monthly check, so you’ll get it all back if you live long enough. In other words, don’t draw Social Security AND earn much over the annual earning’s limit.

Most financial planners will advise you to take your Social Security benefits as soon as you can. That means as soon as:

  1. You are not working full time, and
  2. Have your health insurance worked out. Either you are on a spouse’s health plan at work, eligible for the VA or are able to afford private health insurance at www.healthcare.gov

About 30% of Americans start their benefits at age 62, another 30% draw at their Full Retirement Age and the rest are all over the place.

What to consider when drawing early?

How much do you need your money? How healthy are you? How long do you expect to live? What other sources of income do you have? Are you married or thinking about marriage or divorce? How much will your part time job pay you annually? Are you likely to get a full time job soon?

Sylvia Gordon, aka Medicare Mama®, is an expert on all things Medicare and Social Security. She is the 2nd Generation here at The Medicare Family and has served on the advisory boards of major insurance companies like UnitedHealthcare®, Cigna, and Anthem. In her free time, she can be found taking care of her animals (dogs, goats, peacocks, chickens), and reading a good book. Learn More.
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