American retirees have a lot of options regarding when they claim their Social Security benefits. You can file as early as age 62, wait until your Social Security-mandated "full retirement age," or delay your benefits until as late as age 70. Each option has benefits and drawbacks -- for example, delaying benefits will get you bigger monthly checks, while claiming early means you can enjoy the extra income that much sooner.
The best choice depends on the individual's circumstances and goals. But what do the Social Security experts plan to do in their own lives? We asked three of our own experts when they plan to take their Social Security benefits and why, and here's what they had to say.
In the interest of full disclosure, I'm in my 30s, so my plans could easily change between now and my retirement age. However, my current plan is to wait as long as possible before I collect Social Security. Right now that means 70 years old, but I wouldn't be surprised to see this pushed back by a few years before I get there.
There are a few reasons I plan to do this. First and most obviously, my Social Security checks will be bigger if I wait longer. If I until 70 to collect benefits, as opposed to my standard retirement age of 67, my monthly checks will be about 24% larger.
Another reason is that I plan to take excellent care of my health, and longevity seems to run in my family. The Social Security Administration calculates benefit amounts based on life expectancy after you reach a certain age so that, in theory, you should get approximately the same total benefit no matter when you start collecting. However, if you have reason to believe you'll significantly outlive the average, you could come out ahead by filing later.
Perhaps the biggest reason that I plan to wait as long as I can is that I'm currently taking control of my own retirement savings. I invest regularly in my Roth IRA and SEP (a retirement account for the self-employed), I and plan to have more than enough to retire with, regardless of Social Security. This means I will be able to afford to wait if I so choose.
With just a couple of months left until my 45th birthday, I'm the oldster in this group, and my current Social Security plan involves a couple of steps. First, I'll wait until my full retirement age of 67, file for benefits, and immediately suspend them. Then I'll wait until the maximum age of 70 to start pulling benefits for myself.
The reason is that I want my spouse to have the option of receiving Social Security spousal benefits based on my work history as soon as possible, all while allowing my own benefits to keep growing and provide a higher survivors benefit down the road. My family history makes it questionable whether I'll live to the average U.S. life expectancy, so if I were single, I might well make the decision to claim benefits earlier. But from the standpoint of maximizing my family's total lifetime benefits, delaying makes the most sense at this point.
Of course, a lot could change in the next 20 years, both in Social Security and in my own personal finances. Right now, I'm fortunate enough to be on course for a self-sufficient retirement, but there's no guarantee that my investment portfolio will cooperate when the time comes to retire. With some luck, I can foresee being able to retire early and still defer Social Security well beyond the minimum claiming age of 62.
Like Matt, I'm in my 30s (38), but like Dan, my family history doesn't make any promises about longevity. Furthermore, my wife's family history also gives us some reason to think we could be better off retiring earlier rather than later. With that said, my wife and I have made a serious effort to save and invest, and our efforts over the past decade put us well ahead of the median of our age and income peers:
A lot will happen over the next few decades that could change our retirement trajectory, but we are currently on the path to reach retirement age with a significant margin of safety beyond Social Security.
With those things in mind -- and the acknowledgement that there will likely be changes to Social Security in the coming years -- my plan is to take my benefit as soon as it, along with my other sources of retirement income, gives me the financial means to retire in comfort. If that means taking the benefit before I would receive the maximum payout, that's fine.
While getting the largest monthly payout is nice, my situation will likely put a premium on time versus money. If I can retire sooner with a smaller payout -- even if there's a chance I could leave some lifetime benefit dollars on the table -- I'll take the smaller payout. Money is nice, but time is irreplaceable.
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