Social Security: Sooner Is Sometimes Better

BOSTON (TheStreet) -- The popular advice when it comes to collecting Social Security benefits is to forestall payments until you reach the maximum allowed by age.

That may not always be the best strategy.

The Social Security Administration offers online calculators to help decide when to collect. It warns, however, that there is no "best age" to receive benefits.

To illustrate the differential, the SSA uses the example that if your full retirement age is 66 and your monthly benefit starting at that age is $1,000, choosing to start getting benefits at age 62 will reduce them by 25%, to $750, to account for the longer time you'll collect. If you choose to not receive benefits until age 70, you would increase your monthly benefit amount to $1,320, 32% more per month.

Ideally, payments will even out over the course of an average lifespan, no matter when you begin collecting. The amount you get at the start, however, sets the base for the amount you will get for the rest of your life, aside from cost-of-living adjustments.

WHEN LESS IS MORE

Looking at longer life spans and the need for greater postretirement income later in life, many see the wisdom in waiting to collect on Social Security until they reach the top tier.

Some investors have gone as far as to maximize the benefit by telling the SSA to stop sending monthly checks calculated on early retirement payouts, repaying what has already been received (only the principal is required) and, at age 70, refiling their claim. The strategy is intended not only to collect more each month, but because it allows investment of previously collected payments. Done correctly, the maneuver can mean thousands of dollars of additional annual income.

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