Question

Bryan is turning 62 later this year and is still working, but plans to retire once he is eligible for Medicare. He recently learned that he can start taking Social Security benefits early and is thinking about taking them as part of a birthday present to himself - especially given his parents who are healthy and in their 90’s no longer give him a present. Assuming he has enough cash flow for current needs, give him two reasons why it might make sense to delay taking benefits until later.

Answer 1

Answer -

Step - (1) - Information Given -

Bryan is turning 62 later this year and is still working, but plans to retire once he is eligible for Medicare.

He recently learned that he can start taking Social Security benefits early and is thinking about taking them as part of a birthday present to himself. He has enough cash flow for current needs.

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Step - (2) -Two reasons why Bryan should delay taking Social Security benefits until later -

1) Waiting until full retirement age (66 years old for many, 67 for those born in 1960 or later) results in a benefit some 30% higher than taking benefits at age 62. Waiting until age 70 results in a benefit about another 32% higher.

2) If Bryan start taking Social Security benefits early, his benefit will be reduced by $1 for every $2 he earn above a certain limit, which in 2019 is $17640. This earnings test disappears at his full retirement age, so it’s usually best to wait until then to apply for Social Security benefits.