One of the most common questions we get from some of our clients nearing retirement is - “When should I file for Social Security?” I want to give you three things that you should be thinking about when you start thinking about Social Security filing.
The first thing is - how’s your health? And does longevity run in your family? If you have any health problems, it’s sometimes a good idea to think about filing for Social Security a little bit early. If you have longevity in your family and you expect you might live until 100, sometimes it makes sense to wait a little bit later since you’ll get a higher benefit.
The second thing to think about is employment. If you intend to continue working up until you’re 67, usually it doesn’t make sense to file early because your Social Security benefits will be reduced based on every dollar that you earn from employment. So, if you do plan to continue working, you should wait until at least 67 to file.
And then the third thing to consider is taxes. Depending on other income sources that you have, Social Security becomes 50-80% taxable. So, when you’re thinking about filing for Social Security - if you have other income sources, you should be thinking about taxes as well.
To give you an extra tidbit here in the end…how to calculate your benefits.
When you start thinking about filing for Social Security, you also want to consider the amount of the benefit. At age 62 is the earliest age you can file, and you would get 75% of the full retirement age benefit. Your full retirement age is typically going to be somewhere close to age 67, which is when you would get the full benefit, and if you wait until age 70, you will get 124% of that full retirement age benefit.
We generally recommend working with a financial advisor to determine when the optimal age is for you to file for Social Security. So, please give us a call if there’s anything we can do to help.