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2 Critical Deciding Factors in Taking Social Security Early or Late

By Diane Mtetwa - May 1, 2021 at 5:16AM

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Make sure you consider these two things before you take Social Security.

When to take Social Security is a huge decision. The time that you can start it ranges between the ages of 62 and 70 and the age you choose will determine how big of a payment you receive.

If you take Social Security at your full retirement age (FRA), you will be eligible for your standard benefit. Every year that you take it early your benefit will be reduced. You'll also receive increases for every year past your FRA that you delay. If your FRA is 66 and your monthly benefit at that time is $2,200, your reduced benefit at 62 would be $1,650, and your delayed benefit at age 70 would be $2,904. 

While you don't want to make a mistake and choose the wrong time, there is no perfect answer. The best time for taking it is unique to you, but it does greatly depend on these two things. 

Mature couple hugging and smiling.

Image source: Getty Images.

1. Your health

How much you get from the Social Security system over your lifetime could be determined by how long you live. That's why one of the biggest factors in when you should take Social Security is your health, because it could play a big role in how long you could live.

For example, with a standard benefit of $2,200 at 66, the table below shows you how much you'd get over your lifetime if you lived to 75, 80, or 85.

Total Received If Claimed at 62 If Claimed at 66 If Claimed at 70
At age 75 $257,400 $237,600 $174,240
At age 80 $356,400 $369,600 $348,480
At age 85 $455,400 $501,600 $522,720

Calculations by author.

The shorter your life expectancy, the more sense it makes that you take your benefit early. On average, Americans live to be age 78.7 and if you end up around this average, taking your benefit at your FRA makes the most sense. On the other hand, the longer you live, the better off you are delaying your benefit.

Predicting how long you will live is impossible. This will largely be a guess, but there are considerations that you can use in your calculation like your gender and family medical history that will help you predict more accurately. 

2. Other income sources

No matter how long you expect you will live, when you will take Social Security can often boil down to need. Even if you could benefit from the larger payment by delaying Social Security, if you can't pay your bills without it, you may have to take it earlier than you planned.

That need may be greater or less depending on other income sources that you have. Are you still working full or part-time when you reach age 62? Will you have a pension that you can start collecting? Or do you have a spouse that is still working? If so, will they cover your expenses? And can you get away with delaying taking Social Security?

How much money have you saved in your retirement accounts for expenses can also play a huge role in when you take this monthly payment. If you've saved enough money and can live off of withdrawals from your investment accounts for a few years, waiting until you take Social Security could be an option.

When you take Social Security may seem like a complicated decision. Especially if you're like the majority of Americans and Social Security will replace a significant portion of your working income. And when you take it could determine how comfortably you live in retirement. But planning in advance for this important decision could help ensure that you make the best possible choice. 


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