Blunder # 6 – Filing for Social Security Too Early

There is more to Social Security strategy than most people are aware of. Did you know if you begin taking social security benefits at age 62, your benefits will be about 25% less than if you had waited until you reach Full Retirement Age which is 66 or 67 depending on your year of birth. And, if you wait until you are age 70, your benefit would be an additional 30% higher.

Most begin taking their Social Security benefit as soon as they are eligible because they want the money sooner than later but for the vast majority of people, this is the least attractive economic option because you end up locking in lower payments for the rest of your life. Although every situation is different and one must always consider health status and life expectancy before making the decision, most people are far better off if they wait until age 70 to begin receiving their benefits. A financial advisor can help you quantify the impact of starting social security benefits at various times but in general you are far better off to delay as long as possible even if it means withdrawing money from your retirement accounts to fill the income gap until the benefit kicks in.

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