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Why Waiting Longer for Social Security Is Usually Smart

By Dan Caplinger - Oct 20, 2013 at 5:30PM

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Many people start taking Social Security as soon as they can, but waiting for benefits is often the smarter move.

The decision about when you should start receiving monthly payments from Social Security has huge financial implications that will last the rest of your life. As a result, you can't afford to make the wrong choice. But many Americans don't have the information to make an informed choice about whether to collect benefits now or wait until later.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, tries to close the information gap by explaining the arguments for and against waiting longer for Social Security. As Dan notes, you can receive benefits as early as age 62, but they come with reduced payments compared to waiting until the current full retirement age of 66. On the other hand, you can get extra amounts in your benefit payment if you wait beyond full retirement age, maxing out at age 70.

Dan points out that one key consideration is the breakeven date, at which bigger payments taken later catch up with smaller payments taken earlier. With life expectancies for those between the ages of 62 to 70 running at around 85 to 86 right now, most people are better served by waiting even before taking into account additional factors like survivors' benefits. In the end, you have to consider your own personal taxes, investment returns, and availability of other financial reserves in order to make the best decision.

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