I would be surprised if just about everyone hasn’t heard the news: Social Security and Medicare programs are running out of money faster than previously projected. Many people are worried about Social Security’s long-term prospects. In fact, those fears may be prompting even more workers than normal to claim benefits at age 62 (the earliest age allowed). However, by doing so, you may be accepting a guaranteed monthly payout that is permanently reduced by as much as 25% from what your full retirement age benefit could be. Before making such a life-altering decision, you may wish to take into consideration the following:
1) Understand, the longer you wait to claim benefits, the greater your monthly benefits should be;
2) Don’t let the media attention and frenzy around the sustainability of these programs scare you into taking actions that you would not otherwise take . . . program reforms typically occur slowly and are announced years in advance and phased in over even more years;
3) Take the time to calculate how much income you may need in retirement and determine how much of that income will come from your private savings, pension, and various retirement funds.
Ultimately, only you can make a knowledgeable decision regarding when it is the appropriate time for you to retire and start taking your Social Security benefits. However, before doing so, make sure you sit down and “crunch” all the numbers so that you may make the best decision for your situation and yourself.
For more information about assessing your social security benefits and how to best plan for their use in your retirement, read this article from the Wall Streeet Journal’s MarketWatch or their SmartMoney blog.