For Social Security, Timing Is Key

As baby boomers turn 60, there's a big decision on the horizon.

It's not just deciding when to retire -- it's also deciding when to start taking Social Security checks. The mere timing of when you start receiving the payments will have a major impact on retirement planning.

That monthly check may not allow the retirement lifestyle you dream of -- the maximum yearly payment for a 2006 retiree is about $24,685. But deciding whether to take the payments at age 62, wait until your designated retirement age or delay it even further is a choice that must be made carefully.

The first step is to stop thinking in terms of age 65, the "traditional" retirement age at which everyone previously qualified for Social Security. Now, for those born after 1937, the eligibility age creeps up a few months or years, depending on your birth year.

For example, those born in 1940 become eligible for full retirement benefits at 65 and six months. Those born in 1943 to 1954 will have to wait until age 66 to fully qualify for Social Security. To find your eligibility age, go to the government's Social Security Web site and click on "plan your retirement."

Taking Benefits Early

But that new "eligibility age" isn't set in stone. You can actually start taking benefits earlier, at age 62. Your benefits will be permanently reduced if you make this choice, though they will be adjusted upward annually as a result of inflation.

For example, those born in the 1943-to-1954 period will find their benefits reduced to 75% of what they would have received at age 66 if they decide to take benefits at age 62.

You might consider taking reduced benefits early if you can't work any longer and need the money to live on. Or if you figure your heredity or current state of health portends a shorter life span. Some people decide to take their checks now because they worry that Social Security might "run out" of money. Others figure that even if they don't need the money, they could take the checks early and invest that cash.

« Previous Page

1 2 3

Next Page »