Social Security Considerations

Starting to take your social security income is a once in a lifetime decision.  The most common considerations are deciding when to start, longevity, spousal benefits as well as continuing to work in retirement.  The average life expectancy is now 83 for males and 85.5 for females according to a Centers for Disease Control and Prevention report.  Let’s look at an example of starting social security income at various ages.  For this illustration, I assume death at age 85 and my regular full retirement age (FRA) is 67 with a benefit of $1000 per month.

If I collect social security income early at 62 my monthly benefit would be reduced to $700.  I will receive $193,200 over my life.

At my FRA of 67 with a monthly benefit of $1,000, I will collect $228,000.

If I wait until 70 I would receive $1,320 with my delayed credits and will receive $253,440 over my lifetime.

Another point to consider are spousal benefits.  If you are married, you will generally receive the greater of: your own benefit which is based on your individual earnings or your spousal benefit which is up to 50% of your spouse’s FRA benefit.  If your spouse waits to start collecting benefits to receive delayed credits, these will not increase the amount of your spousal benefit.  It’s also important to note that you cannot collect on your spouse’s record until your spouse files for benefits.  

Continuing to work after you start Social Security benefits can potentially impact the amount you receive. If you are working and taking SS income prior to your FRA you can earn up to $17,042 without affecting your benefits, but after this point, your benefits will be reduced by $1 for every $2 you earn over the limit.  If you are older than your FRA, there is no income limit and no reduction in benefits. 

As you can see deciding when to start your income can be complex. Weighing the trades off of when to start and considering your spouse in the equation will help you come up with your unique answer.

Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.

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