For those of you on the verge of retirement, deciding when to take Social Security is a big decision that is ultimately tied to your individual circumstance. One rule applies across the board: taking benefits early means you stand to leave a lot of money on the table. In 2014, early claimers will see their monthly benefits reduced by 25 percent compared to what they would have received if they waited claiming until age 66, the current full retirement age. Waiting until claiming benefits until age 70, and you’ll receive 132% of the benefits paid.
The handy chart from Forbes contributor John Wasik following shows the percentage of benefits paid as it relates to age — an excellent tool to share.
For most retirees with adequate savings, the best strategy has always been to wait until either full retirement age or until age 70. Too many retire at the wrong time — leaving some $120,000 in lifetime benefits on the table. Those who retire at 62 leave a lot of money on the table. The government wants you to wait as long as you can before collecting Social Security.
Yet Social Security planning is not as simple as making one decision. If you have a spouse, you have to consider their benefit. There are also survivor benefits. You need a strategy. a good place to start is the Social Security Web site, which has several calculators. Or, you may contact us (AIM) for some guidance.
A Government Accountability Office (GAO) study released last month showed why far too many Americans take Social Security early and the costs of doing so.
*Those who retire at the earliest-possible age tend to need Social Security to supplement their income.Those who wait are less reliant upon the program. One solid way to maximiz Social Security is to save more and fully fund your retirement plans.
According to the GAO: “Our analysis shows that the median income for those who delay was 45 percent higher after claiming benefits than for those who claimed early, and 33 percent higher at age 72. Although delayed claimers have higher median Social Security benefits, those benefits make up a smaller portion of household income than for early claimes,”
*Those who retire early can do so with greater health security.You may now obtain policies to fill the gap between age 62 and 65. That might allow you to wait at least until age 65 to collect Social Security. We can assist you in obtaining the best coverage for you.
Below is the chart showing the % of full benefits paid at different ages.
Age You Take Benefits % of benefits paid
Source: GAO analysis of Social Security Administration documentation. Note: The Primary Insurance Amount (PIA) is the benefit a person would receive if he/she elects to begin receiving Social Security retirement benets at his/her full retirement age.