If you’re nearing retirement age, now’s the time to start thinking about Social Security and when you’ll want to begin receiving benefit payments. You can start drawing benefits at 62, and the amount you’ll be slated to receive will depend on your life expectancy, notes the Social Security Administration. However, if you wait until you reach your full retirement age (FRA) of 66 (67 if you were born in 1960 or later) or extend that wait until 70, you will draw larger monthly payments, with 70 getting you the maximum. Simply put, the earlier you start receiving payments, the lower the amount will be, as there is a lengthier time frame to cover. (For more, see 3 Benefits of Working Beyond Minimum Retirement Age.)    

When should you apply to receive benefits? There is no right or wrong answer to this question. Instead, you must carefully consider your current situation and how filing early or waiting to draw benefits will impact you and your family.

What’s Your Financial Situation?

Although you’ll receive more money each month if you wait, it may not be in your best interest to do so if you’re financially strapped. This could be due to high levels of consumer debt, minimal cash reserves or little to no retirement income to help soften the blow.     

Are You Still Employed?

If you are still employed and elect to start receiving Social Security benefits before your full retirement age, the payment amount will be reduced if your earnings exceed a certain amount. “If you take your benefit early and earn more than $16,920 [in 2017], you will be facing a reduction in your benefit. Social Security will take $1 for every $2 of earned income over the limit,” says Patrick Traverse, investment advisor representative, MoneyCoach, Mt. Pleasant, S.C.

However, you will begin to receive the withheld amount when you reach full retirement age. This could pose an issue if you are anticipating a shorter life expectancy and want to receive as much as you can while you’re still alive.    

How’s Your Health?

Very few want to think about life expectancy, but it must be considered when deciding when to draw Social Security benefits. If you’ve recently been handed a clean bill of health by your physician, you may be leaning toward waiting it out. However, if your health is declining, it may not make sense to wait. You might as well start collecting benefits as soon as you can to help with medical bills and save for your family's future. Be aware, however, that collecting benefits early could reduce your spouse's benefits (see below).

“It makes sense to take Social Security early if there are health issues and if the individual is having difficulty meeting expenses. In a perfect world, we’d have everyone wait until FRA. Life isn’t always perfect,” says Marguerita Cheng, CFP®, RICP® , CEO of Blue Ocean Global Wealth in Gaithersburg, Md.

Are You Married with Children?

Spouses are also eligible for Social Security benefits, but the amount received will vary based on a few factors. Choosing to receive benefits early will decrease the amount of spousal benefits your spouse receives, both during your lifetime and after your death. However, if your spouse is getting benefits based on your spouse's own work record, not yours, this will not affect him/her. If you have children under 18 or 22 – or who are disabled – you should also know that their benefit amount will be reduced if you start receiving payments early.

Estimate Your Monthly Benefit

One way to reach a decision is to compare the benefits you might get at various retirement ages, using the retirement calculators found on the Social Security Administration’s website to calculate your projected monthly benefit. Among those you might find useful are the retirement estimator, earnings test calculator, benefits for spouses calculator, and the early or late retirement calculator. Also, review the annual statement you get in the mail to know where you stand, or call (800) 772-1213 for more information. Best Ways to Contact the Social Security Adminstration can help.

The Bottom Line

Ultimately, it’s up to you to decide if you should wait to start receiving Social Security benefits. Before taking action, carefully evaluate how your decision will affect both you and your family. Call the Social Security office to clarify any questions or concerns you may have. (For more, see The Pros and (Mostly) Cons of Early Retirement.)

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