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How to know the right time to collect Social Security

Three simple questions can help you make one of the biggest financial decisions of your retirement years.

By businessed Oct 15, 2013 12:47PM

This post is from Beth Braverman at partner site The Fiscal Times.

The Fiscal Times on MSN MoneyFor most retirees, it makes sense to wait as long as possible to start receiving Social Security, but individual circumstances differ. There are three major factors to consider.

Credit: MR & PR/Getty Images
Caption: Senior man reading Social Security form

Question: I retired at 58, work part time, and have a net worth of  $1.3 million, including investments. When is a good time for me to collect Social Security? –Birdie

Dear Birdie,


First of all, congratulations on amassing a decent retirement nest egg and for continuing to work part-time as your retirement begins.

Doing those two things puts you ahead of many of your peers when it comes to retirement preparation – and it’s smart to start thinking strategically about when to tap your Social Security benefits. Social Security can be worth hundreds of thousands of dollars throughout a lifetime, and for many people, it represents their only retirement income stream that’s designed to increase with inflation.

For most retirees, it makes sense to wait as long as possible to start receiving Social Security to collect as big a check as possible, especially if you can live off earnings from a job instead of  starting to draw down your nest egg. But every individual’s circumstances are different.

Here are three factors to consider:

1. Does your part-time job make you subject to the 'earnings test'?

If you’re under full retirement age and still working, your monthly Social Security check will be reduced by $1 for every $2 you make above $15,120 this year. “If you’re age 62 to 67 and still earning a significant paycheck, the earnings test is a very compelling reason to avoid taking Social Security,” says Tim Maurer, director of financial planning at The Financial Consulate in Cockeysville, Md.

The year you reach full retirement age, you can earn up to $40,080, and your Social Security check will be reduced by $1 for every $3 you earn past that. Once you’ve gone beyond full retirement age, the earnings test no longer applies.

2. How long do you expect to live?

Remember, you can take Social Security at any time from age 62 through age 70, but every year that you wait, your checks will be worth more. So, at age 62, you’ll only get 75 percent of what you could collect at full retirement age. A 62-year-old retiring in 2013 eligible for the maximum benefit would get $1,923 per month, versus the $2,533 monthly check received by someone of full retirement age.

Continuing to delay collection of Social Security until after your full retirement age will net you 8 percent more per year – that’s a guaranteed return you’re unlikely to find anywhere else. “Assuming you’ve got an average or longer-than-average life expectancy, you’ll want to wait until age 70 to take Social Security,” says Bill Reichenstein, author of Social Security Strategies.

On average, a man reaching age 65 today can expect to live until 84, according to the Social Security Administration. One out of every four 65-year-olds will live past age 90; and one in 10 will see 95.

If, however, you’re in ill health or have some other reason to believe you won’t reach those ripe old ages, starting your Social Security benefits early may maximize the amount you’ll collect, since you may not live long enough to realize the full 8 percent return.

3. How long do you expect your spouse to live?

If you’re married and earned more than your spouse during your working years, you’ll want to also consider how long you expect him (or her) to live. That’s because after the higher earner passes away, that person’s benefits get transferred to the spouse to collect until his or her death. If your spouse is much healthier or much younger than you, waiting to collect your Social Security benefits will ensure that he or she receives a larger monthly check after you’ve passed away.


More from The Fiscal Times: 


Oct 16, 2013 2:21AM
The right time to collect social security is BEFORE your dead.
Oct 15, 2013 9:27PM
Oct 16, 2013 4:21AM

Take it when you can get it , unless you have a crystal ball.


You can't  depend on the people in the Chrome dome, they have spent all your SS money on Toilet Seats and the like.

Its Wednesday and my SS check is not in the mail box. I guess I will just have to be a beggar. or move to CHINA.

Oct 15, 2013 8:54PM
Oct 15, 2013 9:49PM
fact of the matter is, had the demos under johnson not been allowed to "borrow" from the ss  fund, ss payments would not be a part of the budget and the shut down would have zero affect.   Now the demos are using it like a sledge hammer to spend even more....
Oct 16, 2013 12:27PM
Take it as soon as you can. I took mine at 62. My reason? I have no idea how long I will live. I do know one thing, the US Government is counting on me dying as soon as possible so they do not have to pay me a dime. 
     I have paid into SS since I started working. I was a teen ager back then. A few months ago, my best friend died of a massive heart attack at 58. His wife was killed when she was hit by a drunk driver at 64, A co worker who ran 5 miles a day and ate well, exercised all the time died at 59 from prostate cancer. In addition, I had my Primary care Physician who I had seen for 20 years die at 64 with Pancreatic  cancer and another Dr, I had seen for 15 years  died at 59 from heart disease. He was a cardiologist!! The last time I saw him he told me "You are fine, enjoy life"!!
   Well, I plan on having Uncle Sam support me for at least a few years since I have supported him for so many years.
    The motto? None of us know how long we have. Enjoy life and take your piece of the pie while you can!
Oct 16, 2013 12:33PM

As soon as F*K*G possible...........the national debt is 17 Trillion. Well part of that debt is BORROWED against Social Security.


People love to say wait till you are 70, then your check is 400 dollars more, I say to those you may only have 4 hours left on EARTH, life is too short.


Get YOUR money back, as soon as you can before Congress gives it to a lazy bastard that has never worked a hard days work in his life.

Oct 15, 2013 10:23PM
@ the bart man it's not yours it is mine! But Obama thinks it is his, be glad when that SOB is gone, Gone , Gone.
Oct 16, 2013 10:35AM

Take it when you are eligible at 62 because too many play that "Russian roulette " with their age hoping to reach the max for a few hundred dollars more (oh ok one more year) and there is NO guarantee in life you will even get to 63.

Seen too many have this happen to know- Grab the gold ring when you can!

Oct 16, 2013 9:19AM
My sister died at 65 of cancer.  Took only about 6 months when diagnosed.  At least she got benefits from 62 like I do As do the math says 78 to break even.  
Oct 16, 2013 8:53AM

I plan to collect Social Sec. ASAP, the earlier the better,

Oreo is running out of dog food as I text.

Oct 16, 2013 10:05AM
Take it ASAP and put $300-$500/month into an IRA, then you can have best of both scenarios.
Oct 16, 2013 1:52PM
I'm going to take mine just as soon as I can.  This is no entitlement.  Government forcibly took this money from every paycheck since I was 18 yrs old.  Now I want it back.
Oct 15, 2013 8:23PM
Better get it before Thursday!  DEFAULT!!!!!!!!!!!!  That huge fart is the fault of the washington ashes.
Oct 15, 2013 9:50PM

Do the math it will take 15 to 16 years beyond 62 to break even if you wait to 67 to receive payments.  Nobody is guaranteed to live until the ripe old age of 78.  Secondly, when the Republicans regain power your payments are going to be drastically reduced.  If your not working take your benefit while you can get it. 

Oct 16, 2013 11:06AM
There is no such thing as security. Not in the world we live in, politically and economically. Work as long as you can. Collect anything you can. Stay healthy.
Oct 16, 2013 12:36PM
lalalalalalalal! see this same story every dam week.unless you are in PERFECT health,apply 6mos. before you turn 62.
Oct 16, 2013 12:56PM
If you do some research, you will find the earlier the better.  You can never recoup what you may have received if you waited, with this government everything is in jeopardy!

Oct 15, 2013 8:44PM
Actually, just a few Washington ashes bearing town blindly.
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