Timing is Everything

When should you start taking Social Security benefits? It depends.

You’re entitled to receive 100% of the benefits based on earnings history at full retirement age (FRA). FRA ranges from age 66 for folks who reach that age this year to age 67 for those born after 1959. But you can elect to begin taking benefits as early as age 62, although your monthly benefits will be reduced. The monthly reduction can be up to 25% of the FRA amount. The closer you apply to FRA, however, the lesser the reduction.

Conversely, if you choose to delay benefits, you’ll receive a higher monthly amount than the FRA amount. Essentially, benefits are increased by 8% for each year you delay taking benefits until age 70. But the cost is that you give up years’ worth of benefits. There’s a breakeven point if you live long enough, but there’s obviously no guarantee that you will. One you reach age 70 your benefit maxes out and is increased for inflammation.

Small Business Tax Strategies
July 2021