The question of when you should collect your Social Security retirement benefits, differs from the age at which you should stop working. You can quit working, but wait to draw a Social Security check. You can also keep working past the age at which you qualify for retirement benefits, and choose whether you want to get your “day job” paycheck and a Social Security check or wait until a later date to get your check from Uncle Sam.
Evaluating when to draw Social Security, can affect your taxes and how big your retirement check will be for the rest of your life. Here are 3 tips for deciding when to start drawing Social Security retirement benefits.
- If You Plan to Quit Working Before Your Full Retirement Age, Delay Collecting Social Security
The money you get every month as Social Security retirement benefits will depend on:
- How much you paid into the Social Security system. A person who earned $100,000 a year paid more in Social Security and Medicare taxes than someone who made $20,000 a year. The higher wage-earner will get a larger Social Security retirement check than the lower wage-earner. Your highest earning years are likely to be toward the end of your career.
- How long you paid into the Social Security system. The Social Security Administration (SSA) will calculate your monthly check using your average taxable wages for your 35 highest-earning years. If you did not work for 35 years, all the years you did not work will count as $0 each, which will bring down your average earnings. Working a few more years can prevent this from happening.
- Your age when you retire. You will get your entire amount of retirement benefits. if you wait until full retirement age to draw your Social Security checks. Full retirement age used to be age 65, but it is now between 65 and 67, depending on the year of your birth. If you get benefits before your full retirement age, the SSA will penalize you with lower checks for the rest of your life. Waiting until age 70, will add a substantial bonus to your checks.
To maximize your Social Security check, consider delaying when you draw your checks until your full retirement age or until age 70.
- Working During Retirement Can Reduce Your Social Security Check
If you collect your Social Security benefits and then work either full-time or part-time, the government might keep part of your Social Security checks. If you are below your full retirement age, they will cut your check by $1 for every $2 you make above that year’s limit.
In the months before full retirement age, the SSA will keep $1 for every $3 you earn over the annual maximum. Once you hit full retirement age, you can work and earn as much as you want with no reduction of your Social Security check.
- There is More to Life Than Money
If you are a person who prefers to live in the moment and not stress about what will happen years later, go ahead and draw your Social Security check when you feel like it, regardless the long-term financial consequences. Delayed gratification can make people so unhappy, that having the money right now is worth the financial penalty. Only you can make the call on this issue.
The law in every state is different, and this article is about the general law. Talk with an elder law attorney in your area.
Bankrate. “Best Age for Social Security retirement benefits.” (accessed October 6, 2018) https://www.bankrate.com/retirement/when-to-take-social-security/