Dear Dr. Don,
What’s the best time to file for Social Security retirement benefits? I’m 62, single and currently working as an insurance broker. I’m thinking of collecting Social Security now, so I can slow down and enter retirement gradually. I earn about $40,000, and I also have rental income and two small mortgage payments to make for the next 30 years. I don’t need my Social Security income now, but I can’t see why I should wait.
— Joanna Juncture
If you don’t need the money now, then my recommendation is for you to wait until at least your full retirement age, 66, to file for benefits. It may be good to wait even longer, perhaps to age 70, since you’ll receive a higher payment in the form of delayed retirement credits.
Jumping the gun
Too many people have the mindset that they want to maximize the amount of money they get from Social Security. And since life is uncertain, they file as soon as they’re eligible. That’s a misplaced concern. Government studies show that retirees, on average, receive the same amount of money in Social Security benefits no matter when they file for benefits.
Caution pays off
So, if you’re in good health and you don’t need the money, you should wait.
By waiting, you earn a higher monthly benefit. And that higher benefit, like all Social Security retirement benefits, is indexed for inflation. So waiting helps ensure you have more money in your later years.
And remember: The option to file is always there. You don’t need to file now as a precautionary measure.
Also, please note that if you file early while you’re still earning income, you may further reduce your benefit. You should check with your accountant if you’re uncertain how your residual income is treated in the benefits calculation. You’ll also owe income taxes on your Social Security benefits along with your other income.
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