I've written dozens of articles about Social Security over the
past year, and along the way I've created a large number of
charts to illustrate one aspect of the topic or another. With
this in mind, I thought it'd be interesting to share three of the
more informative charts together in one place.
The first is probably one you've seen before. It illustrates
the relationship between the size of your monthly benefits in
relation to your
primary insurance amount
, and when you elect to take them.
Choosing to take them at age 62 (the earliest possible time)
as opposed to 66 (the prevailing full retirement age), or even 70
(after which you no longer get credit for deferring), can
make a big difference
in your monthly check.
Because of early benefit reductions before 66, your actual
benefits get progressively smaller the earlier you elect to
receive them. On the flipside, every year you defer after
reaching full retirement will boost your benefits by 8%.
The second figure expands on this by illustrating the
cumulative surplus or deficit associated with taking benefits
immediately after turning 62, as opposed to waiting until full
retirement at 66.
In official retirement jargon, this is known as a breakeven
analysis. Before turning 77, your cumulative benefits are greater
if you begin receiving them at 62. This is because you've
received checks -- albeit smaller ones -- for four more years
than had you waited until your 66th birthday.
The relationship inverts once you turn 78. After that, the
larger checks you get as a result of waiting outpace the smaller
but more numerous checks associated with claiming benefits early.
And as you can see, the extra money you receive by waiting until
full retirement age rises quickly as time goes on.
Last but not least, the third figure shows the percentage of
men and women who choose to claim Social Security benefits at age
62. Although it may not be obvious from the chart, this remains
most prevalent age
at which retirees begin claiming benefits.
There are a
variety of reasons
for this. If people aren't optimistic about their life
expectancy, then it's prudent to take benefits sooner rather than
later. Additionally, if you're employed in a physically or
emotionally demanding job, then applying for Social Security
could be the best way to extract yourself from that
Of course, at the end of the day, the decision of when to
apply for benefits is deeply personal and based on your own
particular set of facts and circumstances. Nevertheless, figures
like these can help steer you in the best direction.
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Social Security: The 3 Most Revealing Charts
About Your Benefits
originally appeared on Fool.com.
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