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What's the Best Age to Claim Social Security 62, 66, or 70? - YouTube
Channel: Financial Fast Lane
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what is the best stage to claim your
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social security benefits
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62 66 70
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that is the subject of this video
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welcome to another episode of the
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financial fast lane my name is lane
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martinson
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and so what you're going to want to do
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first here is get a copy of your social
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security statement
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for both you and or your spouse if
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you're married
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if you don't have a copy of the
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statement you're going to want to go to
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the ssa.gov website
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and create an account you should
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definitely do that
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both you and your spouse if you're
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married you're going to be able to
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access the statement and on there
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among other things you're going to be
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able to see and check
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your earnings history and so you really
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want to look at that
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and make sure it looks accurate to you
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because
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the social security administration is
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definitely
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capable of making some mistakes as well
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as your employer
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over the years could have made a mistake
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in reporting as well
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so it's really important that you get
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credit for
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everything that you've paid into the
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social security system
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now they're going to look at your best
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35 years
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to determine your benefit and so
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if you're earning more now than you have
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in the past every
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year you're going to bump off one of the
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lower
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earning years so there can be some
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advantage
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just making sure you understand that now
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you have to have at least
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10 years of work history to qualify for
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your own benefit
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but you don't necessarily have to have
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any earnings history to qualify for a
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spousal benefit if your spouse
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qualifies right so on the social
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security statement
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they have some numbers they're going to
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show you what your pia
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is that stands for primary insurance
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amount
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and that is the dollar amount that is
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considered to be your full benefit at
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your full retirement age
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they will also show you what your
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benefit would be
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if you delay until age 70 to claim
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and they'll also show you what the
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dollar amount would be if you were to
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claim
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at the earliest days possible of 62.
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something else that is really important
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to understand is that
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if you are eligible to receive benefits
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and you contact the social security
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administration
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they are going to be more than happy to
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turn on or start those benefits
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and so they are not allowed to provide
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any kind of planning advice
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they're just going to answer questions
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and
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they are really not in the business of
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optimizing your benefits you just want
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to understand that
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you may be familiar with larry kotlikoff
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he's a professor from boston university
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he
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is widely known as an expert in social
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security
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the inter workings when congress needs
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an expert
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he is one of the guys they call on to
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help understand the details
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he probably understands the
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interworkings of social security better
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than
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about anyone so let's take a look at
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this quick video clip
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and see what he has to say on this
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subject if you look at the social
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security handbook describing
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all the provisions for about social
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security benefits
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it's uh got 2728 rules
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and they're written in a language that
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nobody can understand
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then there's a set of rules to explain
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those rules that's called the program
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operating manual system
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and that's got maybe a hundred thousand
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rules to explain the 2728 rules
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so actually social security is actually
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more
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complex than the federal income tax when
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you look at it carefully
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it's easy to make big mistakes because
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it can cost you
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a hundred thousand two hundred four
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hundred thousand dollars if you make the
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wrong mistake
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as we uh would calculate this as in
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terms of your lifetime benefits
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first of all you need to realize social
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security provides a very good deal for
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waiting to collect
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and you you have to plan to live to your
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maximum age of life because you might
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so giving up some years of
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lower benefits to get many more years of
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higher benefits
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is worth considering then there's also
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extra benefits that you can get you can
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get
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if you're married or divorce spousal
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benefits if you're widowed
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spousal or survivor benefits if you've
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got a young child
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children's benefits mother and father
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benefits so if you're not aware of these
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benefits
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you're going to miss out on those and
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then the third thing is that you have to
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be careful about taking which benefit
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when
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because when you take one benefit
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too soon you can wipe out the other
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benefits
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rather than getting them both
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so retirement planning is surprisingly
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complex
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and confusing and there are literally
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hundreds of
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different ways in which you could claim
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your benefits from a strategic
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standpoint
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and so how are you going to get it right
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and how you're going to
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figure out you know what is the best
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option for you
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your age is certainly a factor
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your marital status and the age of your
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spouse
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your marital history if you've been
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divorced
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or not there there's all kinds of rules
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around
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collecting benefits from an ex-spouse
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what's your health situation your
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longevity
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for you and or your spouse there are
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other spousal considerations
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what other assets do you have for
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retirement income
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what is your employment status how many
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more years do you plan to work
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are you going to work part-time all of
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these are really important
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pieces of information to make a good
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decision the number of years that you've
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actually worked
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what is your tax scenario look like what
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about your housing and
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your equity in your home there are
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strategies associated with social
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security that
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can make a really big difference on each
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of these points
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what are the survivor benefit needs are
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there minor children
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do you have disabilities if you can
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qualify for a social security disability
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you could get a larger benefit if you're
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under your full retirement age
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and so that may make a lot of sense for
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many people
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and then what is the actual need for
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income how great is the need
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all of these make up the mix
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in determining what is the best strategy
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so just some basic
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definitions to keep in mind the fra
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your full retirement age that is the age
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the social security administration
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considers to be the age in which you
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would receive your full benefit
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and it's going to be based off of your
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date of birth
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the the pia the primary insurance amount
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that is the dollar amount that you would
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get at your full retirement age
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and then of course we have the ssa for
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the social security administration
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now if you were born between 1943 and
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1954
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then your fra is age 66
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and for every year beyond 54 you add two
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months to your full retirement age
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all the way up to age 60. so it looks
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like this
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1943 1954 full retirement age 66
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1955 your full retirement age is 66 in
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two months
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66 in four months 66 and six months and
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so on
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and then if you were born in 1960 or
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later your full retirement age would be
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67.
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i think this chart is really helpful to
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get a visual
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this is assuming that your full
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retirement age is 66
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if you claim at the earliest days
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possible 62
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you will be taking a 25 reduction in
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benefits
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and that's a permanent reduction for the
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rest of your life
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if you wait just one more year it's a 20
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reduction another year it's only 13
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and so forth once you reach full
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retirement age
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you would then be eligible to receive
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your full retirement benefit if you were
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to delay just one year you're going to
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get a guaranteed eight percent increase
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in the benefit
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another year another guaranteed date and
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so forth all the way up to age 70.
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now there is never a any reason to
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delay past 70 there is no benefit
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so the latest you would ever want to to
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claim would be at age 70.
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here's another visual to kind of put
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some some dollars to it
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in this example we're going to assume
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again you have a full retirement age of
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66
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and your your benefit in this example
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being 2
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663 so if you went ahead and claimed 62
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you'd be getting 1997.
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which is only 75 percent of the full
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benefit
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you wait one year and you can see what
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that looks like
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and each year that you wait to claim you
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can see how that would increase
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and then at age 66 you get the full
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benefit
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a67 you're getting that guaranteed eight
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percent
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and then for each year thereafter you
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can see that really grows nicely
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we're over four thousand dollars if we
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if we also include the
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the cost of living adjustments you know
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the average it has been
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which is about 2.8 percent per year and
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so it's really a really big difference
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two thousand dollars versus four
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thousand dollars
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but of course there's many years of not
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receiving benefits
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um when you delay right and so there's
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so how do you weigh and consider what is
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the best option
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also if your full retirement age is 67
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instead of 66 that gives you one last
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year so if you were to claim at 62
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it's it's not 25 percent reduction it's
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a 30
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reduction and then you only have three
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years
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of the delayed credits so you can't get
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quite as much
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you know when you're full retirement age
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of 67.
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and so if we look at everyone who's
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receiving social security benefits today
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in the united states it's a large
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majority 74 percent
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claimed early and so that means only 26
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percent
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are receiving what is considered their
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full benefit or an increased benefit
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so let's break this down and look at the
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claiming trends over time
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if we go back to 1996 there was about 56
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percent of men and
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63 percent of women that claimed at age
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62
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the clear majority but by 2013
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it was just 42 percent of men and 48
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percent of women claiming
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62 and then by 2018 it was 27
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and 31 percent so more and more people
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are recognizing that it is often to
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their advantage
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to not claim at the earliest days
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possible but to claim some time after
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that
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now is claiming early
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the best option for some people
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sometimes yes it is it's not going to be
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for everybody
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because you can leave a lot of money on
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the table
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you've really got to consider all these
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other factors
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so when we're talking about total
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lifetime cumulative benefits
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paid out from social security let's
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assume a life expectancy of age 85.
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the green would be delaying and
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the in the red here we're looking at
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claiming early
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so the difference being the total
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cumulative payout
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is the difference of 324 thousand
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dollars so that's a lot of money
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and that's mostly coming in those last
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five years so
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if you live past 80
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it's about a 324 000 difference you're
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getting in those last five years of life
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so that's it's a lot of money so
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something to really think about
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now what if you live to say 95 then it's
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a huge difference right
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we're looking about 600 000 more money
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that you could receive by delaying your
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benefits
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over claiming them early so there's a
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crossover point
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everyone has a crossover point it's
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typically going to be around age 80
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but if you live past age 80 then there
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is more benefit
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money that you could receive and so
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now again we're just talking about the
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gross payout
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because if we're not taking into account
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taxes here
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or the other things that could actually
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decrease your social security benefits
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and so it could look quite different
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based on some other factors so you want
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to keep that in mind now
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you know the big the terminology that
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you hear a lot is maximizing your social
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security benefits how do you maximize
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and get the most well you know we can
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look just at the math and we can
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make some decisions based on what is the
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maximum amount
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but what is more important is is having
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optimized retirement income and that
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comes through a comprehensive retirement
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income plan
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if you think of your social security as
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kind of one separate thing
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all by itself and then you think of any
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other assets that you might have or your
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home and these other things
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all separate of each other that's a
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mistake
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it's really in the optimizing and the
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coordinating
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of all these things including taxes that
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that really is going to give you the
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most
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income sustainable over your retirement
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will social security be there for you
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that is a legitimate question
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and one that weighs heavy on a lot of
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people's minds
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because of our huge national debt and
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deficits
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we do have an aging population and a
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shrinking workforce
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75 million baby boomers started to
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retire
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back in 2011 we are
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retiring at a rate of about 10 000
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people every single day
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which is an average of 3.6 million
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people per year
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and it will continue at that same rate
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for the next 12 years
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never before have we had a shrinking
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workforce
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and a growing retirement population
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and so there's there's fewer and fewer
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people who will be working
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and contributing into the social
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security system with more and more
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pulling
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on its resources according to social
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security the trust funds
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will be depleted without any reforms
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and so they're able to continue their
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current trajectory
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for about 15 years at that point the
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social security trust fund is empty
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and then it is estimated that the the
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new taxes coming in
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from the workforce would be enough to
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support about 75 percent
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of the social security benefits now
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i don't believe that's going to happen i
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don't believe the american people are
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going to allow it to happen
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and so if you have concern about social
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security not being there for you i would
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shift that concern to taxes are likely
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to be a lot higher in the future
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and social security is only one of the
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reasons why that why that's true
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and so one of the biggest strategies
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that you want to be aware of is
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optimizing
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your retirement income so that you can
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avoid
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the taxation on social security it is
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possible for most people
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but you got to have a good plan and you
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got to know what you're doing i have
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other videos and information where we
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can we go into some of those details but
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just that one strategy of avoiding
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taxation on your social security
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benefits will add
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on average about seven years to your
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retirement income
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makes a huge difference so again what is
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the best strategy what is the best age
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for claiming your social security
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benefits it's
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going to be very different for each
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person i want to make this easy for you
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we can provide you
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with a professional social security
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analysis and strategy report
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customized for your specific situation
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it's a comprehensive
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detailed 20 page report and yet very
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easy to read
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summary where you can consider the
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different strategies
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and what that may look like in your
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situation
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doing this and getting making a good
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decision here could easily save you
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thousands of dollars in retirement
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if you're interested in this it is
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available for a nominal fee
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uh there's a direct link in the
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description below
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but you can also just go to
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socialsecuritylane.com
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and get more information about how to
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get your own
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personalized social security strategy
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analysis
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if you have interest in that you can
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click below for more information
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i hope you found this educational and i
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look forward
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to seeing you in the next video
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