The words “Social Security” remain synonymous with retirement benefits for seniors. Earlier generations grew up with the understanding that Social Security would provide an income net in their golden years, allowing a modest but safe retirement. However, the current generation does not have nearly the same picture of the system. Political debates are daily filled with arguments about the “impending” collapse of the system and the bare bones support given to those on the program.
For many New Yorkers, Social Security represents only a small part of their retirement plans. Still, considerations must be given in estate planning to when one should begin collecting Social Security. There are different options for taking early withdrawals, regular withdrawals, or delaying payments for potential benefit down the road.
In general, payouts range from 75% of “entitled benefit” for payments at age 62; 100% of benefits of age 66; and 132% of benefit at 70. Lawmakers are frequently discussing changes to this scheme, particularly in light of rising life expectancies, and so it is critical to be aware of the potential alterations down the road.
What is Best for You?
No two people are in the exact same financial situation. For various reasons, some may be required to take the payouts at age 62, even though that means a significantly lower payment. Waiting a few years results in significant payment increases, particularly considering that those annual payments will last for years (or even decades) into the future.
A Forbes story this month mentioned a few of the individual factors that affect the decision of when to take payments. Current health, ability to work, desire to work, and access to other retirement resources will all factor significantly into the prudent decision in your case. In addition, there are complex issues related to spousal benefits. Full spousal retirement benefits are usually 50%–meaning a spouse can take 50% of their spouse’s benefit amount instead of their own. This is common if one spouse did not work or only worked minimally.
For most New Yorkers today, Social Security considerations are just one part of their overall retirement planning. However, it remains prudent for residents to discuss Social Security issues with financial experts and estate planning attorneys to ensure that they make logical choices regarding when to take withdrawals. Tens of thousands (or even hundreds of thousands) of dollars may still hang in the balance. The Social Security Administration itself is not around to provide tailored strategic advice in your case, so you must ensure you find advocates who can look out specifically for your interests.