When Should I Take Social Security?

The most common question I hear regarding social security is simply, “When should I take it?” To find a blanket answer would be like trying to answer the question, “What car should I buy?” The answer will always be “it depends.” What is your commute? How large is your family? Should you consider electric? Do you haul heavy items regularly? Simply put, one cannot recommend a car without more information. Answering when to take Social security is no different, it depends. 

Below are some items to consider when speaking with your financial professional. 

Earned Income: How long do you plan to earn income through wages and when is your full retirement age? If you earn income through wages or a business, it can affect your social security amount if you have taken benefits prior to your full social security retirement age. Benefits are withheld after a specified amount, and your benefits are then recalculated after full retirement age. 

Cashflow: What is your cashflow picture now, after retirement, and after starting social security? Everyone may have different resources to consider, and income is taxed in various ways. A retiree may have substantial passive income from real estate or farm cash rent that meets current living expenses. As a result, delaying social security may be a wise decision because additional cashflow is not necessary. Understanding your cashflow picture and integrating all financial resources can help make the social security picture clearer.  

Pension: Do you have a pension that interacts with social security? A social security component often exists and corresponds with traditional pension plans. It must be considered when deciding which pension option is right for you.  

Wages: Who is the higher wage earner for a married couple? Is an ex-spouse to be considered? Because social security rules depend on marriage status, spouses and ex-spouses must be considered. For example, if one spouse passes then the widow will receive the higher benefit of the two.  If delaying social security to increase the benefit is the decision, it may make sense to apply the strategy only to the higher wage earner knowing that the higher benefit will carry forward should one spouse pass prematurely.

These are just a few examples to consider in making your decision. Many other factors may exist for your situation, but a comprehensive understanding of your entire financial picture will help guide you to the right decision. 

Reach out to your financial advisor to review your situation and don’t forget to join us on Tuesday, October 25, for an Education Session on Social Security at SBC Wealth Management. RSVP today

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