Social Security – Timing Is Everything
While Social Security is not the primary source of retirement income for most Americans, it can serve as an inflation-protected annuity during retirement years. As such, it is important to understand the rules surrounding eligibility and the timing of initiation of benefits. Prior to the passage of the Bipartisan Budget Act of 2015, married couples could benefit from several planning strategies to maximize the receipt of benefits. While this legislation discontinued the availability of these strategies, there are still opportunities to maximize benefits through careful consideration of the timing of electing benefits.
The earliest age at which benefits may begin is 62. For a person whose full retirement age is 67, if benefits are initiated at age 62, there will be a 31% reduction from the full retirement benefit amount. Conversely, if benefits are not initiated until age 70, there will be a 25% premium over the full retirement benefit.