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Should I Take Early or Delayed Social Security?

There are pros and cons for Georgia seniors

Besides lifetime earnings, the decision of when to begin drawing social security retirement benefits has the greatest effect on the amount someone receives. Seniors can take benefits as early as age 62, or wait until age 70. The range of monthly benefit amount will vary widely depending on when the benefit is taken.

How are social security retirement benefits calculated?

Once someone has worked for ten or more years, that person has gained eligibility for social security retirement benefits. However, benefits cannot be drawn until that person reaches early retirement age, as defined by the Social Security Administration (SSA). Currently, that is age 62, meaning seniors can begin taking benefits any time after their 62nd birthday. Otherwise, they can draw social security retirement at full retirement age, or delay benefits. Specifically, all the options are:

  • early retirement at age 62
  • full retirement at age 66 or 67 (depending on year of birth)
  • delayed retirement up until age 70

The monthly benefit amount a senior will receive once retired is based on their lifetime earnings; the higher the earnings, the higher the benefit amount. To calculate their benefit, the SSA looks at the retiree’s 35 highest earning years and uses a formula to arrive at a monthly benefit amount. Seniors should use the SSA retirement estimator to calculate their estimated benefit well in advance of retirement to get an understanding of how much they will receive.

How does retirement age affect the benefit amount?

Retirees will receive their full benefit amount if they retire and apply for social security at their full retirement age. Under the current law, full retirement age for anyone born in 1960 or later is 67 years old. For those born before 1960, the full retirement age occurs sometime during their 66th year.

If you’re turning 62 in 2018, and you elect to receive early social security retirement, you’ll receive a benefit reduced 26.7% from the full retirement age benefit. The amount of the reduction decreases each month the you get closer to full retirement age.

You can also choose to work beyond their full retirement age and delay taking the benefit. If retirement is delayed until age 70, a retiree can expect an increased benefit amount of approximately 30 percent of their full retirement monthly benefit amount. Delayed retirement credits end at age 70, so there is no incentive to delay beyond then.

For example, if your full retirement benefit amount is $1,000, taken at age 66 or 67, an early or delayed benefit amount will be:

  • $733 monthly benefit amount if taken at age 62
  • $1,300 monthly benefit amount if taken at age 70

Delaying retirement the full eight years beyond early retirement at age 62 amounts to a benefit amount nearly double the early retirement benefit.

Spouses can qualify for one another’s benefit

Spouses may earn their own benefit or, if their earnings are much lower, can choose to take a benefit amount equal to 50% of the higher earning spouse. This also applies to divorced spouses who were married for at least ten years. The benefit to the divorced spouse will not affect the amount to the recipient or their spouse. If the higher earning spouse passes away, a surviving spouse will receive the entire benefit amount of the deceased spouse—the amount of which will depend on whether the deceased spouse has retired early or delayed retirement. This also applies for a divorced surviving spouse.

The SSA indicates that a good rule of thumb for benefits is: If a senior needs the social security benefit money, take it; if a senior can afford to wait, take it later. The SSA cautions that social security retirement is only one part of a proper retirement plan, which should also include income from pensions or retirement accounts, savings and, potentially, part-time employment. Seniors nearing retirement should contact an experienced Georgia elder law attorney to determine the best time to apply for social security retirement.

For more information on this area, see our overview of elder law and estate planning.

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