If you are like most Americans, you have been paying into Social Security your entire working life. It’s typically done through payroll or self-employment taxes. It’s possible that you (and your employer) have contributed hundreds of thousands of dollars over the decades. Now, as retirement creeps closer, you might be wondering how much of those contributions you can collect. It’s a natural question, one that many soon-to-be-retired folks ask themselves. This article will tell you everything you need to know about calculating social security payments, along with the factors that impact that calculation. As you’ll come to understand, you have a few choices to make.
10. When To Start Collecting Social Security?
Ultimately, the decision of when to begin collecting Social Security is up to you. You must decide at what age you want to begin receiving these benefits. Your age, working status, health, spending habits, and other savings will all factor into this decision. Simply put, you’ll get more money from Social Security if you wait to collect it.
In general, it’s best to wait and collect Social Security as late as possible. This will increase the monthly payments (which are adjusted for inflation each year). You should be aware that the American retirement system has traditionally been a “three-legged stool.” That means Social Security is just one part of your retirement income. Personal savings and pensions are the other two legs. Keep in mind that Social Security was never designed to be your sole source of retirement income.
While traditional pensions are slowly disappearing, more employers are moving towards 401(k) plans or Roth IRAs as a means of sponsored, tax deferred retirement savings. Whenever available, you should take advantage of these savings vehicles too.