Money & Retire

Social Security – When to Take It?

Important Update – Don’t Miss Out on Larger Social Security Payments!

A strategy for extra payments is changing. Many wives and divorced women have been benefiting. However, this will be going away for many people. To take advantage of those legal benefits you must be 62 or older by Jan. 1, 2016 — or have been born Jan. 1, 1954, or earlier. Those people are grandfathered in; they can collect those benefits once they reach their full retirement age, even if that is several years from now. (Those who turn 62 after Jan. 1, 2016 will be no longer eligible.) See the strategies for collecting your legal maximum – especially points 6-10 below in the ZestNow previous article below. The NY Times Report: The End of Social Security Loopholes: What Now?

Here are some of the way for deciding for when to start your Social Security payments:

  1. Collect at full retirement age.

    If you were born 1943-1954, 66 is your full retirement age.
    Tip: You must be full retirement age the entire month. Born on June 8th, don’t start until July 1st. If you were born on January 1st, benefits are figured as if your birthday was the previous year.

  2. Take payments before full retirement age – but receive smaller payments.

    Payments are cut 25% if taken at 62, reduced less as you get closer to full retirement age. See the chart below for reductions by age.

  3. Take it early if it make sense for your own situation.

    You can collect at any time between age 62 and full retirement age. However, if you start benefits early, your benefits are reduced a fraction of a percent for each month before your full retirement age.
    a.You need the money now
    b.Your health is a problem
    c. You’re very financially secure –your want to use the funds for other purposes.
    d. You want to collect on your own retirement now at the lower rate, then switch to your spouse’s full rate at a later time.

  4. Take it early if your concerned about your larger financial future.

    Here are some other reasons to start taking Social Security early:
    a. You think the government will have to lower payments later.
    b. You think inflation will be much higher later and payments won’t keep up.
    c. You’ve calculated the total payments you’d miss by collecting early; calculated how long it would take to make up the difference and you don’t like the answer.

  5. Wait until after full retirement age.

    Your payments rise by 8% compounded every year, until you’re 70. Then they remain constant. Collect at 70 at the latest.
    Tip: 25% of 65 year old’s today will live to 85, 10% will live to 90 and figures are going up. You may need the money later.

  6. Collect as a spouse.

    You receive 50% of your spouse’s amount. The 50% figure will be further reduced if you haven’t reached your full retirement age.
    Tip: Collect as early as 62. Your payments will not decrease your spouse’s payment. Check to see if you would receive higher payments based on your account or your spouse’s.

  7. Collect as a widow or widower.

    You receive 100% of the your spouse’s benefits, reduced if you haven’t reached your full retirement age or if your spouse already took early-reduced benefits.
    Tip: Check on earlier benefits for disabled widows or widowers or those caring for children.

  8. Collect as a divorced former spouse.

    Were you married at least 10 years? Collect at 62, payments reduced if you haven’t reached full retirement age.
    Tip: If you re-marry, you lose the option – unless you re-marry after 60.
    Tip: If your divorced spouse qualifies for benefits on your account, the benefits you or your family receive are not reduced.

  9. Collect as a divorced spouse whose former spouse has died.

    Were you married at least 10 years? Collect as early as 60. You receive 100% of the former spouse’s benefits, reduced if you haven’t reached full retirement age or if your former spouse already took early-reduced benefits.
    Tip: If you re-marry before 60, you loose the option.
    Tip: The length of marriage rule doesn’t apply, if you are caring for your former spouse’s biological or adopted child.

  10. Still working after 62?

    You can still receive payments, but your payments will be reduced if your income reaches certain levels.
    Tip: Income is counted when it’s earned, not when paid. Be careful of bonuses, payments for accrued vacation or sick days.

  11. Work after full retirement age?

    Collect the full payment.
    Tip: Work as much as you want after full retirement age. No penalties. Or wait until later and let the payment increase by 8% a year until 70.

  12. Children of a Deseased Parent, Disabled Children, Caregivers

    Fairly complex rules apply to benefits for children of the deceased under 16, under 18 or disabled before age 22, or caregivers of those children. Biological children, adopted children, even dependent grandchildren may receive benefits. Talk to a Social Security specialist.
    Tip: Benefits to your children, don’t decrease your benefit

  13. Don’t forget: Social Security payments need to be reported on your tax returns.

Be sure to consult www.socialsecurity.gov for more information specific to your situation.
The chart below from socialsecurity.gov lists age 62 reduction amounts and includes examples based on an estimated monthly benefit of $1000 at full retirement age. Click on your year of birth to find out how much your benefit will be reduced if you retire between age 62 and full retirement age.
Note: If your birthday is on January 1st, your benefit ar figured as if your birthday was in the previous year.
Full Retirement and Age 62 Benefit By Year Of Birth

Year of Birth 1.

Full (normal) Retirement Age

Months between age 62 and full retirement age

At Age 622.
A$1000 retirement benefit would be reduced to
The retirement benefit is reduced by 3.
A $500 spouse’s benefit would be reduced to
The spouse’s benefit is reduced by 4.
65 and 2 months
65 and 4 months
65 and 6 months
65 and 8 months
65 and 10 months
66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months
  1. If you were born on January 1st, you should refer to the previous year.
  2. If you were born on the 1st of the month, we figure the benefit as if your birthday was in the previous month. You must be at least 62 for the entire month to receive benefits.
  3. Percentages are approximate due to rounding.
  4. The maximum benefit for the spouse is 50% of the benefit the worker would receive at full retirement age. The % reduction for the spouse should be applied after the automatic 50% reduction. Percentages are approximate due to rounding.

Also read: Social Security Payments What’s Best For You

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