But one source of income most retirees have in common is Social Security. That's why one of the more frequent questions we hear from pre-retirees and retirees is this: When is the best time to take it?
It's a great question because many people are unaware of just how complex the decision can be. A misstep could potentially cost you thousands of dollars over your lifetime.
So, when should you take Social Security? I can say definitively and with great confidence that the answer is: It depends.
Yes, I know; not what you wanted to hear. Unfortunately, no one answer works for everyone. But there is information you can gather to help you make a more informed decision.
First, let's establish a baseline of knowledge. You might already know these basic rules, but it's important to ensure we understand the basics before we head into the more complex.
If you do the math, you'll find that between ages 62 and 70, there are 96 months when you could apply for Social Security, and each of those months would result in a different calculation for your benefit.
So, how can you know which of those 96 months would be the right time for you to make your move? One way is to do a break-even analysis, which helps you compare how much money you would collect over your lifetime by picking different dates to start claiming the benefits. Information on how to do this is available at various sites online, or your financial professional should be able to assist you.
Beyond those 96 options, there are other strategies that potentially can help you add more income to your Social Security checks. A few of those include:
You can't count on the Social Security Administration for too much help in helping to maximize your benefits. They can tell you how much your monthly checks will be, or whether you are eligible for a particular benefit, but they don't offer advice on what the best options are for you.
Your financial professional, though, should be happy to help provide guidance for increasing the odds that you get the highest possible benefit you have earned.