One of the recommendations I get the most pushback on from retiring clients is to defer their Social Security benefits until age 70.
Note: It’s not appropriate to defer for EVERY client in every situation but certainly for most folks near retirement age for whom I work it appears to be the best decision.
Before I go any further, let me very briefly explain a few of the primary options: The “Full Retirement Age” (FRA) at which people will qualify for their full benefit is around age 66-67 (depending on year of birth). However, you can begin taking a reduced benefit at age 62. Alternatively, you may elect to defer Social Security until age 70 and receive a greater monthly benefit for your lifetime and that of a lower-earning spouse’s lifetime.
For example, if you were born in 1960 or later, your FRA is age 67. By taking benefits early at 62 you would get a 30% reduced benefit. However, for example, if you were born in 1943 or later, your monthly benefit increases 8% each year you defer beyond FRA up to age 70 (or 2/3rds of 1% each month deferred).
There are several reasons that deferring to age 70 is in most people’s best interest: Continue reading “When to Take Social Security: A Real Life Case Study”