Social Security: When’s the Best Time to Cash In?
Given that Social Security is the primary source of income for the elderly, this topic is of considerable concern. Of Americans age 65 and older, roughly 90 percent of them receive Social Security benefits, the average monthly benefit being $1,294. Because 96 percent of American workers are covered by Social Security, deciding when to take Social Security benefits is a question that applies to many. Do you want less money per month sooner, or do you want to wait for a higher monthly payment?
As of the time of this publication, the full retirement age is between 65 and 67, depending on your date of birth. Most people think that it’s best to wait until at least that time in their lives. There are a few scenarios, though, in which cashing in your Social Security earlier or later may financially benefit you.
Increase your monthly payout
Not only does waiting a few years to retire generally increase your overall earnings through additional income from employment, it also increases your monthly Social Security payments. By waiting a few extra years to retire, your payout is increased in two ways. First, by continuing to work, you are placing more money into the Social Security pot, which increases your benefit amount. Second, you may render yourself eligible to receive delayed retirement credit. This credit can increase your benefit amount by up to 8 percent each year up to age 70. If your full retirement age is 67, for instance, retiring at age 70 will provide you with up to 124 percent of your primary benefit.