If you’re nearing retirement and considering taking your Social Security benefits, take a breath first. This is a big decision. The timing of your payouts could play a huge factor in your retirement. Here are three questions to ask yourself before you start collecting your Social Security checks.
What is my Full Retirement Age?
You should know when your retirement age is because it impacts how much your Social Security benefits will be. If you were born in 1960 or later, your full retirement age is 67. If you take your payments before reaching your full retirement age, your checks will be less than ideal. As GoBankingRates notes, if you take your benefits at the earliest possible age (62), your checks could be reduced by up to 30 percent. However, if you wait until 67, your payouts increase by as much as eight percent per year (until you hit 70).
What will my expenses be during retirement?
Before taking Social Security payments, figure out what your retirement expenses will be. Make sure to include fixed items — like your mortgage, rent and utilities — and variable expenses, like hobbies and travel costs.
How much will I need to live comfortably?
You need to think about Social Security benefits as the icing on your retirement cake. They are nice to have, but for most people aren’t sufficient to be their one source of total support. Take stock of your total savings to make sure you’ll have enough money to enjoy your golden years. A good rule of thumb? You’ll want about 70 percent of your pre-retirement income — that includes Social Security benefits, investments and savings — coming in once you are officially in retirement.