62 or 70? Does it Matter?
It can be tempting to claim Social Security benefits as early as possible at age 62. But working even a few years longer can help to enhance Social Security income when the worker decides not to file for benefits until age 65 or later, with the maximum at age 70.
Because Social Security benefits are based on the last 35 years of indexed earnings, any year in which you did not have earnings is marked as a zero in the computation. That is why time away from the workforce can hurt when it comes to these benefits.
Full retirement age varies by when the worker was born. It is currently 67 for those born in 1960 or later and 66 for those born between 1943 and 1954. Each year a worker delays filing for Social Security beyond their full retirement age, they get an 8% increase up until age 70. A worker with a full retirement age of 66 who works until age 70 will reap 32% more in Social Security benefits, for example. Working longer can help people have higher standards of living when they do retire because of these extra Socia Security earnings and the potential ability to save more as well.
Of course, there are many factors to consider when one is looking at Social Security and the work versus retire scenario. Health, job security, the availability of other assets, and other circumstances need to be reviewed. When making decisions relating to filing for Social Security or not, a financial advisor can help by providing information toward evaluating what might be right for you. Any time money is “in motion”, a financial advisor might help you to make informed monetary decisions.
This article is provided for general informational purposes and is not intended to provide any specific advice to any individual.
Seek advice from a qualified professional before taking any action in regard to your finances.
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Todd A. Slingerland, CFP®
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