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Social Security: Start Early, On Time or Delay?

Social Security: Start Early, On Time or Delay?

In agricultural times, extended families lived together, and the younger generations took care of their aging relatives.
But as people left their farms for the cities, life expectancy skyrocketed and families shrunk. Suddenly, the aging population mushroomed while its economic security disappeared.
Until 1935, when President Franklin Roosevelt passed the Social Security Act.

 “…we have tried to frame a law which will give some measure of protection to the average citizen and to his family…against poverty-ridden old age.” President Roosevelt, 1935 (ssa.gov/history)

Today, social security has evolved into an expected retirement benefit for millions of Americans—with benefit amounts fluctuating wildly depending on when they choose to begin receiving them.
And therein lies the critical question: when is the best time to begin getting social security?
For starters, if you were born before 1938, you can only begin accepting social security income at 62. But, if you were born afterwards, your ‘full retirement age’ gradually increases up to age 67.
The big question is: do you want to start getting a smaller monthly amount as soon as you reach that full retirement age, or should you wait and get a larger monthly amount later–but likely for not as long?
Here’s a possible scenario: If your full retirement age is 66, and you expect $1,000 per month, you could instead choose to:

  • Start early at 62 and get $750 per month, or
  • Delay until 70 and get $1,320 per month.

You may be wondering how long you have to live to make up the difference between retiring early vs late. As a general rule, for each year that you wait past full retirement age, the benefit increases by about 8%. Hence, if you start at 70, you would need to live until 82 to make up the difference between delaying versus starting at 62.
Reviewing your personal, financial and health situation is critical in determining the best time to start getting social security benefits.
If you are seriously ill and do not expect to live much longer, applying for social security as soon as possible probably makes sense.
But if you are healthy, married, have children, can continue working past retirement age and/or have another pension plan and savings, it might be better to delay.
It’s also important to know that the amount you get on your first social security check is set for the rest of your life. The only change will be an added ‘cost-of-living adjustment’-that is, extra money to cover inflation. This ensures that the amount you are given is still worth about the same even if the economy grows and prices increase.
Keep in mind that women usually live longer than men. And thanks to modern technology, life expectancy is still increasing. That means that even though social security lasts a lifetime, it’s easy to outlive your other retirement savings.
At Silverman Financial, we can help you plan your retirement so this doesn’t happen. We review your personal needs and goals so all your retirement income lasts for as long as you live.

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