For many Bucks county residents Social Security benefits are an integral part of their financial plan for retirement. Three of the principal factors that determine the amount of your benefits are: earnings history; marital status; and the age you begin taking your benefits. When you start taking your benefits will determine your monthly benefit for the rest of your life.
There are generally three choices as to when to start taking benefits. 1. At Full Retirement Age (FRA). 2. Anytime between age 62 and FRA. 3. Anytime after FRA up to age 70. Full retirement age is 66 for those born between 01/02/43 and 01/02/55. It increases two months each year until 01/02/60 when it becomes fixed at age 70.
If you take benefits at FRA, the monthly benefit will be your Primary Insurance Amount (PIA) as calculated by the Social Security Administration.
If you take benefits earlier than FRA, your monthly benefit will be permanently reduced, and you will need to meet an earnings test until you reach FRA. For example, if you begin taking benefits in 2021 at age 62 your monthly benefit will be reduced by 25% of your projected PIA. You would also have an annual earnings limit of $18,960. For every $2 of earned income over the earnings limit your benefit would be reduced by $1.
If you take benefits anytime after your FRA up until age 70, your monthly benefit will be permanently increased at the rate of 8% per year.
Your actual monthly benefit that you receive when you begin receiving benefits will be increased annually by a cost-of-living adjustment.
There are many variables in determining the optimal age to begin taking your benefits. Some factors include your current financial situation, how long will you live, whether you are an individual, couple, widow or widower, or have one or more special situations.
The Fiduciaries at Winthrop Partners have considerable experience in advising clients on Social Security strategies. Let our experience work for you. Contact Thomas Saunders for a free consultation. 267-454-4585 Thomas.saunders@WinthropPartners.com
WINTHROP PARTNERS is a Fee-Only Fiduciary and Wealth Advisor that provides Investment Management and Wealth Plans to individuals in Doylestown, and Bucks and Montgomery Counties.
Winthrop Partners l 100 Mechanics St. Doylestown, PA 18901 l 267-454-7551 l WinthropPartners.com