Deciding whether to delay your Social Security benefits is a critical choice — and one that can have potentially significant financial payoffs. Take your benefits at your full retirement age and you’ll get 100 percent; wait a year and you’ll get 108 percent; delay even further until you’re 70 and receive 132 percent. However, choosing to postpone is a very personal decision and there are many factors to consider.
If you’re still working when you reach your retirement age and start collecting Social Security, your benefit payments could be subject to taxes. Although you won’t be taxed on more than 85 percent of your benefits, if your Adjusted Gross Income is above a certain point the federal government will take a portion of your benefits. Claim your benefits even earlier and the Social Security Administration will withhold a certain amount on every dollar you make above a defined threshold.
You will also need to evaluate your lifestyle and needs in the coming years. Can you live comfortably through other sources of income, like a pension or a retirement account? Finally, consider your life expectancy and your break-even age (where the cost of waiting is counterbalanced by the increased benefit). These will help you determine whether it’s worth it to take your earnings now, or delay for several years.
Before you make this important decision, we encourage you to speak with an investment advisor who can provide a full spectrum of wealth management guidance and retirement advice. An experience financial partner can help you create a path to maximizing your wealth during retirement.
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