When’s the Smartest Time for You to Collect Social Security?

For nearly half of working Americans, Social Security will be the primary source of income after retirement.

But financial experts warn, that’s setting yourself up for failure. They say, save early and often…and a lot.

Emily Medalen found out the best way to work the Social Security system.
There are several factors to consider when deciding when you want to start collecting social security.

Many Americans take the money and run as early as they can, because they’re concerned that social security funds are going to run out.
But a financial expert tells me, being patient will put at least an extra 30% of your money in your pocket. Here’s how its done.
Most Americans start collecting social security at age 62 – the earliest age you’re allowed to do so.

“The government is offering you money, and you’ve paid into the system a long time, so it’s sort of natural for us to want to collect as early as possible because that incentive is there. Two, I think people are very pessimistic about social security,” says Benjamin Brandt, Financial Consultant, Capital City Wealth Management.

This is due to speculation that social security is going broke – but many experts say this is simply hearsay.

“It’s very unlikely to run out of money in social security because it’s based, it’s funded, on a dedicated payroll tax,” says Brandt.

He says in 2034, it’s expected that social security could end up paying 25% less in benefits.
This is because so many baby boomers are now beginning to collect their benefits. 
So by 2034, there will be less people working and paying in, and more people collecting cash.

“For so many people, social security is a huge cornerstone of their retirement income plan – when really, it should supplement your current savings. It shouldn’t be 80% of your budget. It should be something like 25% of your budget,” says Brandt.

He says instead of taking the money at 62, you can really do yourself a long term favor. 
Hold out as long as possible. 
If you wait until 70….which only 6% of the population does, your monthly social security check will go up by 132%. Here’s his best advice.

“Fund your Roth IRAs, get the 401k matching contributions, and save like it won’t be there, and then when it is there, you’ll be able to live a little bit larger in retirement,” he says.

What he calls “letting compound interest do the heavy lifting,” so you don’t have to later in life.

So if you know you won’t be collecting your social security until after the year 2034, it’s especially important to start saving money right now.

For those who plan to retire in the next few years – if you’re in good health, it’s best to wait til you’re at least 65.
If you start any earlier, your income will be reduced by about 35%.
And if you’re married at 62 or older, remember… between you and your partner, the larger check is the one that counts.
“If you’re married and you out earn your spouse by a lot, that is the check that’s going to last the longest. So the first person that dies… the small check goes away, and the big check stays. So if you have a large earning discrepancy between your spouse, you should delay your check as long as possible, including up to age 70,” says Brandt.
 

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