Social Security When should you begin collecting benefits?

Clients frequently ask, “Should I begin taking social security benefits at age 62, or wait until age 65?” The most critical concern that needs to be addressed before making this decision is medical insurance. We all know that medical insurance is very expensive; however, it becomes more affordable once you qualify for Medicare at age 65 (or latter). Unless you have this problem solved, stop here and wait until age 65 to collect.


Once the insurance hurdle is passed the answer is contingent on when you plan to die and at what after tax rate of return you will enjoy on your investments until then. By starting to collect at 62 you will receive a reduced monthly benefit for life, but you will begin collecting 36 months sooner. This gives you a fair amount of cash to invest which may, or may not, make up for the reduced monthly benefit. It depending on how well your investments do.


Although computed for a specific client’s situation, the following concepts will probably apply to most situations:


 4% 77
 6% 79
 8% 84
 10% 97


To further complicate the situation, some thought must be given to taxes. As a general rule, a portion of your social security benefits may be taxable, depending on your filing status and the amount of other income you have. It may be possible to avoid or reduce this tax by waiting. If this were the case, waiting till age 65 may be your best option, irrespective of your investment acumen <>

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