I open many of my talks with a simple question. What is the most important financial decision you will need to make when planning for retirement? Then I turn to the audience and ask for their answers.
At least one person will shout out, When should I start collecting my Social Security benefit?
To begin to answer this question, you need to know what your benefit is or will be when you retire. To answer this question, you will need these two links to the social security website
Click here to link to Social Security Benefits Estimator
This will help you estimate your social security benefit.
Click here to create your personal account with Social SecurityThis will help you review your social security contribution history that determine what your benefit will be.
Using the second link listed, you can create your personal account. This will allow you to request your social security statements. Now you can review your social security benefit history to figure out what your benefit will be when you reach full retirement age.
I created an account and checked my benefits. There were some years missing so I have my work cut out for me updating my account. I also learned that I made my first social security contribution when I was 15 years old.
The first thing you need to do once you have created your account is check that you have at least 35 years of recorded income. You Social Security benefit is based on the highest 35 years of income. If you stop working before getting credit for 35 years of service, your benefit will be reduced. A zero will be used for each year without earnings.
Even if you have 35 years of earnings, some of those years may be low earnings years. If you continue working those low earning years will be replaced with much higher earning years. This will increase your benefit at full retirement age.
The earliest you can receive your benefit is 62. If you start collecting your benefit before your full retirement age, then your benefit will be reduced up to 35% depending on a number of factors. If you wait to collect your benefit until age 70, you will receive an increase in your benefits for every year you wait between your full retirement age and age 70.
In my next blog, I will discuss working while collecting social security, taxes and other deductions from your social security benefit and indexing.
Until then. Always remember to enjoy the journey.
Information in this blog was taken from ssa.gov/planners/retire/stopwork.html
The material presented in this blog is informational purposes only and should not be taken as personalized advice. Further, the material is intended to be timelyrelative to the recording date of this blog.