The one retirement question every single Baby Boomer (over 78 million of them) must answer is: “When should I file for Social Security benefits?”
Rich, poor or middle class, there are a number of decisions to make about Social Security that depend on many factors, such as income, assets, health, continued employment, life expectancy, family circumstances, goals and more. The rules are the same for everyone, but everyone’s situation is different. You need to proceed carefully because some of the decisions you make about Social Security are irreversible.
Some particular matters of concern:
- Deciding whether to start benefits at age 62 can be the right decision, but it can also cost you a lot of retirement income if you live into your 90’s, or your spouse does.
- You may have additional benefits, or even lose benefits based on marriage, divorce, remarriage and becoming widowed.
- You should carefully consider plans for continuing to work, as well as required minimum distributions from your IRA and whether you’ll be paying unnecessary taxes.
- Once you decide when to apply for Social Security, how do you do it?
You qualify for Social Security retirement benefits when you work and pay Social Security taxes. If you were born in 1929 or later you’ll need 40 credits (10 years of work). Benefits are based on how much you earned during your working career. Higher lifetime earnings result in higher benefits. In addition, when you retire affects your benefits. While you can start receiving benefits at age 62, your benefit will be lower than if you wait until later to retire. Full retirement age starts at age 66 for applicants born 1943-1954; it is increasing until it will be age 67 for applicants born in 1960 and later.
Widows and widowers can begin receiving Social Security benefits at age 60 (or age 50 if disabled). You may be able to start early on one record, and later switch to a full benefit on another record. For example, a surviving wife could take a reduced widow’s benefit at age 60 or 62, and then switch to her full (100%) retirement benefit at full retirement age.
It’s important to understand your rights and options when making these decisions. Get good information, talk to an experienced advisor, and make the best decision for your personal situation.