If I delay retirement, will I get more money from Social Security?

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Question:

I hope to retire in a year or two. What advantages are there to delaying getting my Social Security payments until I'm 70, if I work until 67 or 70? I'm now 65.

Answer:

The Social Security system entitles you to an increased amount in benefits for each year you wait to claim them -- up until age 70. It also reduces your benefits if you retire early. If you start claiming benefits at any time between age 62 and your full retirement age (65, 66, or 67, depending on your year of birth), the amount of your retirement benefit is permanently reduced a fraction of a percent for each month before your full retirement age.

You can get a graphic depiction of your potential benefit amounts directly from the Social Security Administration. Contact the SSA at 800-772-1213 or go to its website at www.ssa.gov/mystatement/ to view your Social Security Statement. You'll get a complete record of your lifetime earnings -- along with an estimate of the monthly benefits you will receive at various retirement ages.

Even though you'll receive more money per month the longer you wait, it's not always better to hold out. For example, you may want to claim benefits earlier if you need money to cover your basic living expenses, or if you have a medical condition that makes it likely that you won't live past age 75.

Your personal break-even point will depend on a combination of factors, including your earnings record and when you were born. To get specific information about your personal break even point, you can call Social Security at 800-772-1213 and ask them to do the calculations for you.

In addition, if your spouse is entitled to collect benefits based on your earnings record, there are certain strategies that allow you both to collect more benefits (such as "Claim and Suspend"). For more informaton, see Nolo's book Social Security, Medicare, and Government Pensions.

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