Knowing how to maximize your Social Security benefits is challenging. No one knows the date they’re going to die. You can’t adequately plan for an unforeseen event like death. However, you might get the most out of your Social Security by preparing now and knowing when to start collecting payments.
Social Security benefits can start as early as 62 years of age. If you choose to collect payments when you turn 62, they will be at a reduced amount. You can wait until you reach full retirement age (FRA), which depends on when you were born and is between 65 and 67. At FRA, you won’t receive the maximum possible payment. Collecting benefits at 70 is the optimal age for maximizing your benefits.
How Your Age Affects Social Security Payments
The monthly payments you receive will be higher if you start collecting benefits later in life. However, it will take longer to receive the same amount if you start taking payments earlier.
Multiple factors can influence whether someone decides to begin benefits sooner or later in life, such as:
- Personal and family medical history
- A spouse’s age and benefits level
- Other sources of income
For example, let’s say your FRA is 67, resulting in $2,000 monthly Social Security benefits. If you decide to take payments when you turn 62, you’ll receive up to a 30 percent reduction in your monthly payments. That means you might only collect $1,400 in benefits.
Waiting until your FRA means you’ll get $2,000 a month. However, if you wait beyond your FRA, benefits will increase by eight percent each year you don’t take payments. Your monthly payment can be as much as $2,480 if you don’t start collecting benefits until you turn 70.
When you calculate these amounts, you can receive approximately $470,000 in Social Security benefits if you start collecting at 62 and live until 90. Waiting until your FRA can net around $595,000 by the time you reach 90 years old. Waiting until you’re 70 will increase the amount you’re paid by the time you’re 90.
Factors to Consider for Starting Social Security Benefits
Life expectancy is a common factor influencing when a person should take Social Security payments. Although you can’t predict when your life will end, specific information can help you estimate your life expectancy.
The chance of living into your 90s might be high if your close relatives also lived into their 90s. If you have a family history of terminal cancer, your life expectancy might be shorter than average. A chronic health problem you suffer from can also influence life expectancy.
Another factor you should consider is your spouse’s medical status and benefits. If the primary breadwinner of the household chooses to collect payments early, the amount of benefits available for their spouse when they die will be reduced.
Employment is a significant factor in determining the right time to begin taking Social Security payments. Your payments will be lower if your income is higher than $19,560 while collecting benefits. In 2022, making more than $19,560 a year and receiving payments before reaching FRA means the amount will be reduced temporarily by $1 for every $2 in income earned above the limit.
Contact our Santa Ana Elder Law Attorneys
Knowing how to maximize your Social Security benefits is crucial. You should consider all contributing factors and start planning now.
Contact our Santa Ana elder law attorneys today if you want to discuss your options and determine the age you should start taking payments to get the most out of your benefits. To speak with an attorney at our Southern California law firm, or at one of our various other offices located throughout the state, contact us at (800) 244-8814.