The question of when you should start collecting your Social Security retirement benefits is different from the age at which you should stop working. You can quit working, but wait to start drawing a Social Security check. You can also keep working past the age at which you qualify for retirement benefits, and choose whether you want to get your “day job” paycheck and a Social Security check, or wait until a later date to start getting your check from Uncle Sam.
Evaluating when to start drawing Social Security can affect your taxes and how big your retirement check will be for the rest of your life. Here are 3 tips for deciding when to start drawing Social Security retirement benefits.
- If You Plan to Quit Working Before Your Full Retirement Age, Delay Collecting Social Security if Possible
The amount of money you get every month as Social Security retirement benefits will depend on:
- How much you paid into the Social Security system. A person who earned $100,000 a year paid more in Social Security and Medicare taxes than someone who made $20,000 a year. The higher wage-earner will get a larger Social Security retirement check than the lower wage-earner. Your highest earning years are likely to be toward the end of your career.
- How long you paid into the Social Security system. The Social Security Administration (SSA) will calculate the amount of your monthly check using your average taxable wages for your 35 highest-earning years. If you did not work for 35 years, all the years you did not work will count as $0 each, which will bring down your average earnings. Working a few more years can prevent this from happening.
- Your age when you retire. You will get your entire amount of retirement benefits if you wait until full retirement age to start drawing your Social Security checks. Full retirement age used to be age 65, but it is now between 65 and 67, depending on the year of your birth. If you start getting benefits before your full retirement age, the SSA will penalize you with lower checks for the rest of your life. Waiting until age 70 will add a substantial bonus to your checks.
To maximize the amount of your Social Security check consider delaying when you start drawing your checks until your full retirement age, or until age 70.
- Working During Retirement Can Reduce Your Social Security Check
If you start collecting your Social Security benefits and then decide to work either full-time or part-time, the government might keep part of your Social Security checks. If you are below your full retirement age, they will cut your check by $1 for every $2 you make above that year’s limit.
In the months before full retirement age, the SSA will keep $1 for every $3 you earn over the annual maximum. Once you hit full retirement age, you can work and earn as much as you want without any reduction of your Social Security check.
- There is More to Life Than Money
If you are a person who prefers to live in the moment and not stress about what is going to happen years down the road, you might want to go ahead and start drawing your Social Security check as soon as you feel like it, regardless the long-term financial consequences. Delayed gratification can make some people so unhappy that having the money right now is worth the financial penalty. Only you can make the call on this issue.
Bankrate. “Best Age for Social Security retirement benefits.” (accessed October 6, 2018) https://www.bankrate.com/retirement/when-to-take-social-security/