20 Mar I’m almost 62. Should I take Social Security now or should I wait?

Q. I’m trying to decide when to take Social Security. I’m almost 62 and I’m still working. I’m not earning enough to add to my retirement accounts. Should I take Social Security now and just stick it in an IRA?
— Still working

A. Deciding when to take Social Security is a tough one.

It really depends on your personal situation and your goals.

First, you need to determine how much you are earning through work, said Nicholas Scheibner, a certified financial planner with Baron Financial Group in Fair Lawn.

He said Social Security will reduce your actual benefits received if you earn over the income limit before Full Retirement Age (FRA), which in your case may be age 67.

“If you are under full retirement age in 2023, Social Security will deduct $1 from your benefit payments for every $2 you earn above the annual limit,” he said. “For 2023, that limit is $21,240.”

He offered this example. If your income is $50,000 for 2023, Social Security will reduce your benefits by $14,380 ($50,000 – $21,240 = $28,760 over the income limit, divided by 2).

So depending on your actual Social Security benefit at 62, you may not actually receive a benefit check while you work, Scheibner said.

Also — and this is a biggie — taking Social Security at 62 will permanently reduce your Social Security benefits, he said.

“Although you may not be earning enough to save for retirement, delaying Social Security is a form of retirement income planning,” he said. “Each year you delay Social Security, the increase in benefits is about 8%. That is government-guaranteed increases. That is difficult to impossible to repeat in an IRA investment strategy year-over-year.”

Scheibner said it may be best to look at your overall expenses and see if you can make little adjustments to help increase your cash flow. This may allow you to add even a small amount each month to a retirement plan.

But, he notes, you should make sure you have an emergency savings account built first before you add money to an IRA or 401(k).

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This story was originally published on March 20, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.