When to collect Social Security retirement benefits?


Because Social Security income lasts your entire life, deciding when to file for it is key. Your Ameriprise financial advisor can recommend options that support your retirement income.

 

How is Social Security different than other forms of income?

Social Security retirement benefits augment your retirement income from a 401(k) account, IRA, pension or other source. The income is unique for several reasons:  

  • You can’t outlive Social Security.
  • It has the backing of the federal government.
  • It’s adjusted for inflation.

 

What’s a rule of thumb for planning my Social Security strategy?

As part of ongoing financial planning, your Ameriprise advisor can recommend timing that’s right for you. Here is general timing to consider:

  • Five years ahead of your estimated retirement date — start planning your Social Security income strategy.
  • One year out from retirement — decide when you want to claim benefits. If you have not done any prior Social Security planning, now is a good time to start.

 

At what age should I collect Social Security benefits?

You can begin receiving Social Security as early as age 62 — but in doing so, your monthly benefits may be reduced for life. If you’re able to wait to collect benefits, it may be worth it in the long run. Each month you delay collection increases your eligible benefits, up to a point:

  • Once you reach full retirement age, you are entitled to 100% of the benefits calculated from your lifetime earnings. See the table below to view your full retirement age.
  • If you begin collecting Social Security at age 70 (the maximum age), your full retirement benefit will be 32% larger than if you began collection at your full retirement age.1
  • Postponing collection of your Social Security retirement benefits can also provide your spouse with a higher survivors benefit.

Everyone’s situation is unique — and waiting may or may not be the right choice for you. Your Ameriprise advisor can help you decide on an approach that could consider:

  • Varying tax rates on Social Security income.
  • Capital gains and IRA withdrawals.
  • Health issues and life expectancy in your family history.
  • Whether your current retirement accounts and additional sources of income (including Social Security or pensions) will cover your essential expenses before you reach full retirement age.

Social Security Full Retirement Age chart

 

What’s the difference between collecting at a younger age versus waiting?

The following chart illustrates two timing examples and the implications for annual and cumulative Social Security retirement benefits. Both individuals are the same age and are eligible for the same level of benefits based on identical lifetime earnings.

 Graph of Social Security benefits timing

This scenario is shown for illustrative purposes only and does not represent actual clients or actual Social Security benefits. Actual client experiences will vary. For simplification, annual inflation adjustments have not been used.

 

Your advisor can recommend personalized options for Social Security income

If your financial situation allows, delaying your Social Security collection until age 70 can help maximize the benefit amount for you and your family. But this may not be the right choice for everyone. Your advisor will evaluate your personal situation and help you consider your options.