When to Begin Collecting Social Security?

For many, social security is a significant source of retirement income. You can collect social security benefits as early as age 62, but is that a good idea?

“You should be aware of the effects associated with taking social security before your full retirement age,” says Jean Daley, private client associate with W3 Wealth Management in Warren.

The most significant impact of taking social security before your retirement age is the reduction of your benefits. In some cases, the reduction could be as high as 30%. 

“Something to consider in choosing when to start taking benefits is longevity,” Daley says. “We can consider things like overall health, family history and preexisting conditions. Taking social security early can make sense if longevity is not on your side.”

To find the right balance, your financial advisor can perform a break-even analysis. This compares what your total payoff may be depending on the start date.

Continuing to work while collecting social security early can also have consequences.

“Your benefits may be reduced if you earn more than the yearly earnings limit ($18,240 in 2020),” Daley says. 

“Anything you earn over and above that amount reduces your benefits by $1 for every $2 that you make. This can have a significant impact of you’re a high earner.”

Daley also notes that social security is only one aspect of your retirement picture. Consult your financial professional to identify the optimal plan for you.

W3 Wealth Management, LLC is a total financial planning firm. And when we say total, we mean it. W3 has assembled a team of accredited advisors including certified financial planners, CPA’s, attorneys, CLU’s and ChFC’s to assure all your financial affairs are working in tandem.

Copyright 2024 The Business Journal, Youngstown, Ohio.