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By Christine Benz | 01-18-2013 12:30 PM

3 Methods to Get the Most Out of Social Security

Andrew Salata of the Social Security Administration describes how the do-over, voluntary suspension, and pick-and-choose strategies can help retirees maximize their lifetime benefits.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. Individuals looking to maximize their Social Security benefits over their lifetimes should be aware of a few key strategies. Joining me to discuss some of them is Andrew Salata. He is a public affairs specialist with the Social Security Administration.

Andrew, thank you so much for being here.

Andrew Salata: You are welcome and thank you for inviting me. I'm looking forward to just giving a little bit of information about some retirement options.

Benz: Let's discuss the timing strategy. If you are nearing retirement you have really three key options: You can take Social Security as soon as you are eligible, you can wait until your full retirement age, or you can wait until age 70.

Let's start by talking about age 62 what the trade-offs are if you do choose to take Social Security as you soon as you are able to?

Salata: Yeah, as you were mentioning the 62 full retirement age, and age 70 are the choices that you usually see on your Social Security statements. They're the ones you can request online from our website.

But with age 62, one of the things to remember about is, although you are receiving benefits earlier up to about 48 months earlier, you are going to have a permanent reduction of about 25%. So your Social Security check would be about 75% of your benefit, and even once you reach those other milestone ages it still remains at that rate.

Benz: Full retirement age then is waiting until I'm 66, and that number is edging up. The younger you are, the higher your full retirement age will be. Let's talk about what sort of benefit you receive at that point?

Salata: For the ones that we're seeing now, who are born between 1943 and going up to 1954, they have a full retirement age of 66. Once we pass 1954, we add two months to each year, so once we get to 1960, the full retirement age is 67. So, 1960 and above we have that age 67, and that's where it's 100% of the benefit.

So, an example that I use is, if you had averaged about $60,000 a year over your lifetime, so about $5,000 a month, you'd receive a little over $2,000 from Social Security or above 40%, so that would be that 100% of your benefit.

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