When Should I Take Social Security?

Social Security is a government-managed pension and disability system, which insures most of the United States’ citizens.

Once you start taking your Social Security benefit, you will receive your monthly income check for the rest of your life. Typically, there is an annual increase in your check for inflation. In 2019, that Cost of Living Adjustment (COLA), was 2%., while the average increase has been 2.6%.

A common question that many people ask is, “When should I take Social Security?” The answer is different for every person.

Things that we consider when we give advice is the health of the client, how much they have in retirement accounts, risk tolerance for their investments, their retirement age and their taxable income in retirement. The most common mistake we see for those applying for Social Security is not understanding how Social Security works. Though, that is a broad answer, it is undeniably the biggest mistake.

There are over 550 different strategies involving Social Security and there are over 100,000 pages describing those strategies in full detail.

Still, most people just take Social Security at three ages: 62 (the earliest one can take their normal Social Security), 70 (the latest they can take their normal Social Security), or right when they retire. It is very important, instead, to take Social Security based on your goals for your retirement and based on the very best strategy to achieve these goals. Any other opinion can be a disservice to your retirement.

Many times when someone realizes that they took their benefit at the wrong time (i.e., too early), it is usually too late to change. Because Social Security lasts your entire lifetime, the choices that you make in your 60s on when to take your Social Security is that much more important. If you have not, and wish to analyze what is the right choice for you, the best option is to consult your advisor.

Article Courtesy of Corey Laird, Minch MacGregor Wealth Management