Retirement: When you should take Social Security

If you think Obamacare is confusing, it’s nothing compared with Social Security. Needless to say, most people want to maximize their benefit … and the benefit for family and survivors‼️

And most people make the mistake of starting their benefit too soon. Take it from someone retired only five years, you want a financial strategy that considers the income you will need many years after you retire. Remember, your greatest risk in retirement is longevity.

Following in some valuable information from an acquaintance of mine, you might want to check out his book before you talk to Social Security.

Social Security is most Americans’ largest retirement asset, but the system is “maddeningly complex, and if you don’t figure it out, you can lose big bucks,” says one of the authors of a new book.

“It’s easy to leave tens of thousands to hundreds of thousands of dollars on the table,” says Laurence Kotlikoff, who wrote Get What’s Yours: The Secrets to Maxing Out Your Social Security with Philip Moeller and Paul Solman. “The benefits are there for the taking. You paid for them. And with a little effort, you can dramatically increase what you get.”

But most people “are doing the wrong thing, which is immediately taking greatly reduced benefits the instant they become available,” he says.

USA TODAY talked to Kotlikoff, a professor of economics at Boston University, about Social Security:

Q: How important is Social Security to most people’s financial strategy in retirement?

A: It’s really critical for almost all of us to get this 100% right. Simply taking benefits at the earliest possible moment without any strategizing can cost almost everybody a lot of money. People don’t understand that there is more than one benefit available to them, and there are different strategies for taking their different benefits.

This is like an investment you have to manage. But we are not told that we have options. I don’t think the Social Security Administration has provided enough education to the public about all the options. In our book we have listed 50 secrets to getting higher lifetime benefits, and 25 “gotchas” that can cost you very big bucks. These include complex strategies for married couples, divorcees, widows, disabled workers and people who are thinking about getting married or divorced.

Q: What are the options for taking Social Security?

A: Full retirement age is 66 for those who were born between 1/2/1943 and 1/1/1955. If you start taking Social Security before your full retirement age, the benefits are subject to an early retirement reduction for every month you do so. For example, taking your own retirement benefit at age 62 rather than full retirement age (if your full retirement age is 66) means you have a 25% lower monthly payment.

The Social Security Administration raises your personal retirement benefit for every month you wait to claim your benefits beyond your full retirement age, and the raises continue through age 70. This Delayed Retirement Credit is 8% a year until you turn 70.

So if your Social Security retirement benefit was going to be $1,000 a month at 66, it would be reduced 25% to $750 if you claimed benefits at age 62. If you didn’t take it until 70, it would raise 32% (four times the 8% annual increase) to $1,320.

Q: What is the biggest mistake people make with Social Security?

A People take their benefits too soon, because they are worried about dying before they collect. In so doing they may reduce or lose entirely the auxiliary benefits they can collect. They can also reduce the widow(er) benefits they can provide their current and former spouses. If you die early, you won’t need money.

The real risk is living until 100 on relatively low benefits because you were impatient and took reduced benefits before your full retirement age. Benefits in real dollars (inflation adjusted) are 76% higher if you start them at 70 than if you start them at 62.

via Retirement: When you should take Social Security.