Filing for Social Security is a Very Important Decision


Filing for Social Security is a Very Important Decision

Posted by Infinite Wealth Advisors, LLC
6 years ago | May 7, 2018

Social Security will comprise a significant part of most retirement plans. Most pre-retirees tend to focus on benefit amounts, as in how much can I expect to receive from Social Security? We know, of course, that this figure is determined by your work history and earnings. But it is also determined by when you claim your benefits, so we urge you to consider the timing as well.

In fact, the timing of your claim might even be more important at this point, since you can’t go back in time and change your earnings record.

Your full, calculated benefit amount will kick in when you reach your “full retirement age”. This age is defined by Social Security, according to your date of birth, but right now those ages fall between 65 and 67 years old. But you can also claim your benefits as early as age 62, if you’re willing to accept payments that are about 25 percent lower than your full benefit amount.

Conversely, you could also wait until age 70 to claim your benefits. For each year that you wait to file your claim, your monthly benefit amount increases by about 8 percent. But since there is no additional increase in payments in exchange for waiting beyond age 70, you should definitely file for benefits at that point.

If you are able to keep working up until, and past your full retirement age, the answer is usually quite clear. You probably don’t need the benefits yet, so allowing them to continue growing is almost always the best route.

But for everyone else, the decision is not so clear. If you’re still working and decide to claim benefits early, Social Security will withhold one dollar of benefits for every two dollars that you earn above a certain threshold. And since that threshold is currently pretty low ($17,040 annually), many people would not receive much benefit from filing their claim early.

Those who need to stop working before full retirement age are often tempted to claim their benefits early. In some cases this is a financial imperative. If you’re experiencing serious health issues at this point, your longevity becomes an important consideration. You might decide that waiting any longer to file your claim is a big risk.

As you can see, timing your Social Security claim is a complicated undertaking. Remember that we’re here to help with this important decision, as well as other aspects of retirement planning. Just give us a call, and we’ll help you evaluate the pros and cons of each possible route.

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