Social Security may be a critical component of your financial strategy in retirement, so before you begin taking it, you should consider three important questions. The answers may affect whether you make the most of this retirement income source.
First, when to start? The Social Security Administration gives people a choice on when they decide to start to receive their Social Security benefit. You can:
If you claim early, you can expect to receive a monthly benefit that will be lower than what you would have earned at full retirement. If you wait until age 70, you can expect to receive an even higher monthly benefit than you would have received if you had begun taking payments at your full retirement age.
Second, should I continue to work? Besides providing you with income and personal satisfaction, spending a few more years in the workforce may help you to increase your retirement benefits. How? Social Security calculates your benefits using a formula based on your 35 highest-earning years. As your highest-earning years may come later in life, spending a few more years at the apex of your career might be a plus in the calculation. If you begin taking benefits prior to your full retirement age and continue to work, however, your benefits will be reduced by $1 for every $2 in earnings above the prevailing annual limit ($17,640 in 2019). After you attain your full retirement age, earned income no longer reduces benefit payments.
Last, how can I maximize my benefit? The easiest way to maximize your monthly Social Security is to simply wait until you turn age 70 before claiming your benefits.
Julia Carlson is a registered principal with, and securities and advisory services are offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.
This material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
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