The decision to start taking Social Security at 65 is a critical one that depends on a variety of factors, including your health, financial situation, and long-term retirement goals. Here’s a breakdown of what to consider before making the choice to claim benefits at this age.
Understanding Social Security Benefits
Social Security benefits are based on your highest 35 years of earnings, which are adjusted for inflation. The benefit amount can also vary depending on the age at which you start receiving payments.
For example, while you can begin taking benefits at age 62, the monthly payout will be smaller than if you waited until your full retirement age, which is 66 or 67 for most people.
At age 65, however, you’re relatively close to your full retirement age and can still receive a larger payout than someone who claims at age 62. In fact, the average monthly benefit for a 65-year-old retired worker in 2023 was $1,563.06, translating to an annual benefit of $18,756.72.
The Pros and Cons of Claiming Benefits at 65
Pros:
Start Receiving Benefits Sooner: Claiming at 65 allows you to receive benefits earlier, which can be particularly advantageous if you need the extra income.
Larger Payout Than at 62: While taking benefits at 62 will reduce your monthly payments, claiming at 65 ensures you get a larger amount than if you waited for the minimum eligibility age.
Potential for a Longer Payout: If you live a long life, starting benefits at 65 may provide a steady income for a longer period.
Cons:
Missed Opportunity for Larger Payments: If you can afford to delay claiming Social Security, doing so could result in a larger monthly benefit if you wait until your full retirement age or 70.
Working During Retirement: If you plan to continue working after claiming benefits, your earnings may reduce the amount of Social Security you receive, depending on your income level.
Maximizing Your Social Security Benefits
It’s also important to consider strategies that could help increase your Social Security income. One such strategy involves waiting to claim until age 70, when you can receive the largest possible monthly benefit.
Additionally, by continuing to work and earn higher wages, you can potentially increase the amount of your monthly Social Security benefit, since your benefit is based on your highest 35 years of earnings.
The Social Security Bonus Most Retirees Overlook
While many focus on the standard payout options, there are little-known strategies that can help you boost your Social Security income by as much as $23,760 annually.
These strategies often involve timing your claims or utilizing spousal benefits, and they can be critical in ensuring you get the most out of your Social Security.
In conclusion, whether or not you should begin taking Social Security at 65 depends on your unique circumstances. Consider your health, income needs, and long-term financial goals when making this decision.
By exploring different claiming strategies and taking steps to maximize your benefits, you can significantly impact your retirement income.
