According to a 2016 poll conducted by Gallup, 59 percent of retirees rely on Social Security payments as a major source of income. Odds are that you, too, will need Social Security benefits to cover at least some of your living expenses after you retire. Because of this, you’ll want these benefits to be as large as possible when retirement actually arrives.
Here are five key questions to ask before you start taking your Social Security benefits.
1. Are you willing to take a smaller monthly benefit for the rest of your life?
Taking Social Security benefits before your full retirement age will cost you in the form of a lower monthly payout. This payout will remain at this lower level for the rest of your life.
You can determine how much of a hit you’ll take claiming benefits early by visiting the Social Security Administration’s retirement planner site. As the site shows, if you start taking your Social Security payments before you hit your full retirement age, your monthly benefit will be lower.
How much lower? If your full retirement age is 67 and you start taking your benefits at 62, your monthly Social Security payment will be reduced by about 30 percent. If you start taking them at 64, they’ll be lower by about 20 percent. Even if you start taking them one year earlier at 66, they’ll still be lower — by about 6.7 percent a month. And remember, this is for the rest of your life.
As you can see, claiming benefits early can significantly reduce the amount of money you receive each month. Let’s say you are slated to receive $1,000 a month in Social Security benefits and your full retirement age is 67. If you started taking…