Frequently Asked Questions – Social Security

By Nicole Young on September 23, 2022

There is no single answer to the question, “When should I take Social Security”. As you make your decision, factors should include your health, spouse, family longevity, and need for income. Here are some questions we regularly address as we build Financial Plans:

Should I take my Social Security Early?

Social Security allows you to begin taking benefits as early as 62. For those that have other resources to live on, you could be missing out on a higher monthly payment:

• Your monthly benefit will be permanently reduced by 30% compared to your full retirement age (age 67 for those born in 1960 or later).
• If you were to pass away, your spouse would be locked into the reduced amount as well if he or she were dependent upon your benefits.
• If you continue to work full or part time while collecting benefits prior to your full retirement age, social security will withhold $1 of benefit for every $2 of income you earn over $19,560.

Why Should I Delay Receiving Social Security?

According to the Department of Social Security¹, a man reaching age 67 can expect to live, on average, until age 85.4 – for women, age 87.7. Additionally, one out of every three 67-year-olds will live past age 90, and one out of seven will live past age 95. For those with average life expectancies, here are some reasons why delaying your benefits makes sense:

• Social Security will grow your benefit by 8% for each year you delay taking benefits past your full retirement age, up to age 70. For someone that will reach their full retirement age at 67, delaying benefits until age 70 would provide a benefit 24% higher. When compared to someone that took benefits at age 62, delaying until age 70 would pay a benefit 77% higher.
• If you were to pass away, your spouse would benefit from the increased amount by assuming your benefit for the rest of their life.
• The breakeven is around 80 years old (adjusts based on annual cost of living adjustments). That is, for each year you (or your spouse) live beyond 80, it would be more beneficial to delay benefits until age 70. If both you and your spouse were to pass way before age 80, it would have been better to take benefits closer to your full retirement age.

Should I Take My Benefits Before Social Security Runs Out of Money?

According to the 2022 annual report from the Social Security Board of Trustees², the program has reserves to pay benefits through 2035, and could pay nearly 80% of benefits for the next 75 years.  It is more likely to see Congress extend the program by increasing taxes or extending the full retirement age versus letting it fail.

Although Social Security is only a piece of your Financial Plan, its ability to preserve your portfolio and provide steady income can grow to play a larger role. If you continue to be concerned about how your decision will affect your plan, consider talking to a Financial Advisor who can explain the pros and cons of your options.

For more information on Social Security, check out our webinar with Mary Beth Franklin at https://www.youtube.com/watch?v=6loKcH8FNu8

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