As you approach etirement age, one important decision you’ll
face is when to apply for Social Security benefits.
As you approach etirement age, one important decision you’ll face is when to apply for Social Security benefits.

The benefits you receive will depend on your earnings history. Each year the Social Security Administra-tion mails an estimated benefits statement to all workers over 25. For a rough idea of what your benefits will be, check your annual statement. Remember that the amounts shown on the statement are in current dollars, with no adjustment for inflation.

You have three choices for when you can begin collecting Social Security benefits. First, you can begin collecting benefits at your normal retirement age. If you do, you will receive full retirement benefits. For Social Security purposes, normal retirement age is 65, but this will increase in stages from the current 65 to 67 by 2027.

Second, you may start receiving benefits as early as age 62. There are advantages and disadvantages to taking your benefits before your full retirement age. You could collect benefits for a longer time, but you will get a slimmed-down check for the rest of your life. In 2003, those electing early retirement at age 62 will receive 76 percent of their full retirement benefit. This choice might make sense if you are in poor health or if you need the money to support yourself.

Finally, you can postpone applying for benefits. Under this alternative, you become eligible for a bonus that will increase your monthly benefit check.

If you are both working and receiving Social Security, your benefits may be reduced depending on your age and how much you earn. Workers under 65 can earn up to $11,520 for 2003 before benefits are reduced. If you are 65 or older, your benefits won’t be reduced no matter how much you earn.

In deciding when to apply for benefits, you should consider your health, desired lifestyle, other resources, and taxes. For help in analyzing your choices, call us.

Kerry Lorincz is a CPA and partner with the accounting and business consulting firm of Bianchi, Lorincz & Co. in downtown Hollister and in Morgan Hill.

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A staff member wrote, edited or posted this article, which may include information provided by one or more third parties.

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