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Eighty years ago this month, President Franklin D. Roosevelt marked the signing of the Social Security Act into law. Ever since, the program has touched the lives of almost every American and has supported our nation’s most vulnerable citizens by giving them a financial safety net.
When it comes to social security, one of the biggest considerations is when to start collecting. Should you begin when you become eligible at age 62, wait until “normal” retirement age (a function of your birth date) or consider delaying your benefits past normal retirement age?
When making your decision, it’s important to keep in mind that Americans are living longer than ever before. As you live longer, the more sense it makes to delay taking Social Security. But of course, each person’s circumstances and needs are different.
Here’s a look at how timing can affect the benefits you receive:
Full Benefits. The Social Security Administration determines the full retirement age (the age at which you’re entitled to full retirement benefits). Those born between 1943 and 1954 are eligible for full benefits at age 66. For those born in 1955 and thereafter, the FRA gradually rises.
|Age to Receive Full Benefits and Reduction for Early Benefits|
|Year of Birth||Normal Retirement Age||% of Full Benefits
At Age 62
|1955||66 and 2 months||74.2|
|1956||66 and 4 months||73.3|
|1957||66 and 6 months||72.5|
|1958||66 and 8 months||71.7|
|1959||66 and 10 months||70.8|
|1960 or later||67||70.0|
Early Benefits. You may begin receiving Social Security when you turn 62. But retiring at the age of 62 will result in a permanently reduced benefit ranging from 25% to 30% depending on your year of birth.
Delayed Benefits. Delaying retirement increases benefits. For those born in 1943 and thereafter, an additional 8% is credited to your permanent benefit amount for each year you wait after reaching the FRA, until you reach age 70. Past 70, no additional credit is added.
For an estimate on the monthly Social Security benefits you may qualify for, refer to your personalized Social Security Statement. You can get a copy of your statement by going to http://www.socialsecurity.gov/mystatement. You may also wish to enlist the help of a financial professional to crunch some numbers and determine what sort of timing would best support the retirement you envision.
Shelley Ford is a financial advisor with The Pelican Bay Group at Morgan Stanley in downtown Denver. Shelley can be reached at 303-572-4839 or visit http://www.morganstanleyfa.com/pelicanbaygroup/story.htm.
The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Morgan Stanley and its Financial Advisors do not provide tax or legal advice. Individuals should seek advice based on their particular circumstances from an independent tax advisor. Morgan Stanley Smith Barney LLC. Member SIPC.