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When to Claim Social Security Benefits

| December 07, 2017
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When to Claim Social Security Benefits:

Let’s talk about one of the most important decisions you will make in your retirement planning. When to claim your social security benefits. There is a lot of confusion out there so I hope to help you find clarity. What you will notice on the statement provided by the Social Security Administration is how your benefit can differ based on your claiming age. You will notice in this example that the persons full retirement age (the age at which they do not have a reduced benefit) is age 66. It is important to realize that your age may be different. Mine, for example is age 67. You will also notice that if you were to claim at age 62 your benefit would be reduced; if you were to delay your social security beyond your full retirement age your social security benefit would increase. The difference between the earliest age and the latest age can be as much as 75% more income. Why is this important? There are two big benefits, I believe, that social security provides that are superior relative to other retirement income sources.

  • The first- social security has a tax preference. That means that not all of your social security benefit is taxable. In some cases, none of it will be taxable but even at the highest level, only 85 cents out of the dollar for each dollar received would be subject to tax.
  • The second- social security has the potential for a cost of living adjustment, also known as COLA. Why is this important? If retirement could last two or three decades or more than having opportunities for your income to grow couldn’t be more valuable.

Do not think that when you retire you should necessarily claim your social security at that time. I would suggest that you do an analysis of your situation to find out what’s right for you and your family. I hope you find this helpful. If we can help you in any way please reach out to us at Gate City Advisors.

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