When Should You Start Taking Social Security?

Lou Scatigna, CFP

Financial Planning Time

I'm oftened asked the question, "When should I start taking Social Security?". I usually follow with the question "Tell me when you are going to die and I will be able to tell you when to start. If you start when you are first eligible you will naturally get less a month but will get more monthly payments over the course of your life. Wait until full retirement age and you will get more a month for the rest of your life but you missed all those payments between early and full retirement age.

Let's look at an example:

Let's say you start Social Security at age 62 and your payment is $1,425/month. If you wait until you are 66 your payment would be $1,950. Since there are 48 months in the four year wait till age 66, you will recieve 48 x $1,425 that totals $68,400. By waiting until 66 you will recieve $525 more a month. We then divide $68,400 by 525 and get 130. So if you live 130 months or 10.86 years past full retirement age then you will be ahead of the game and would have made the right decision. So in this example the retiree would need to live past 72.86. If he dies before age 72.86 he made the wrong choice. In other words it's a gamble. Another thing to keep in mind, woman live longer than men so waiting until full retirement age makes more sense.

Another consideration: Should I take it as soon as eligible while Social Security is still solvent. Still another risk is that Congress raises the retirement age. I for one will take it as soon as I can (if Social Security is still available in 2022.

MetLife offers this cool calculator to help you make the decision.

Check it out:
http://www.metlife.com/fileassets/sscalc