If you’ve begun planning for retirement, you might wonder when you should consider taking your social security benefits. In this blog, we’ll discuss a few concepts that will help you answer the question, “when should I take social security?”
Is there an ideal age to take my benefits?
You want to start taking social security retirement income as late as possible because the longer you wait the more time you give your benefit to compound and get as big as possible.
However, if you want to take benefits early, you need to understand the implications of a lower benefit amount and how that impacts your financial situation. So, you have to factor your other financial resources into that equation to figure out if that makes sense. If you want to delay your benefits, what ends up happening is you will have to supplement that delayed benefit with other income from other assets you’ve accumulated, such as your IRA or your 401k. Again, you need to factor those things in and do the math to determine if that makes sense for you.
Will my social security benefits be taxed?
In general, a portion of it will be taxed, but it depends on how much income you’re making. So it’s something you want to carefully consider as part of your tax strategy for retirement.
Are social security benefits even going to exist when I want to take them?
This is a fair question, and typically one younger folk often ask. The answer is that social security benefits will exist in some format. However, it might be a reduced benefit. The Old Age, Survivors, and Disability Insurance program makes projections on when that benefit will be exhausted. That projection is called the OASDI Trustees report and gets reported on an annual basis. In general, what’s going to happen is workers will continue to pay into the social security system. It might become a pay-as-you-go system for younger individuals, but it will be there even if it’s in a different format. The best thing you can do is plan for a range of scenarios if you’re concerned about when you want to take your benefits.
How can a financial advisor help me with my social security benefits?
A fiduciary financial advisor can help you figure out when the right time for you to take your benefits. Our advisors at Fiduciary Financial Partners can model all the scenarios we can think of with your social security benefit. That way, you have the correct information to make a decision that is best for you and your family.
Are you trying to plan for your retirement? Check out our last blog post: when can I retire?
Interested in more retirement education? Watch out YouTube video: how to minimize taxes in retirement.