You have three main options:
- Start collecting early
- Start collecting at full retirement age
- Start collecting after full retirement age
One of the key trade-offs is longevity. If you die while delaying your benefit, you have made a bad choice. Since we don’t know what our individual life expectancy is, it’s useful to determine what the break-even point are.
As in the previous hypothetical example, let’s assume that your full retirement age is 66 and you are eligible for a benefit of $1000 per month at full retirement age.
- If you begin taking benefits at age 62 your total benefits will equal those who wait until full retirement age at age 78.
- If you begin taking benefits at full retirement age your total benefit payments will equal those waiting until age 70 at age 82.
At age 85 the total benefit payments:
o For those who began at 62 will equal $216,000
o For those who began at 66 will equal $240,000
o For those who began at 70 will equal $253,000