When should you start collecting Social Security?

Practice Pointers. By Amy S. Born, AMNews contributor. April 16, 2007.

PRACTICE POINTERS

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Question: I own my own medical practice and am approaching retirement. What issues should I be thinking about with regard to Social Security at this stage of my life?

Answer: There are many factors that you should take into consideration with regard to Social Security as you approach retirement.

First and foremost is the eligibility requirements for Social Security. To qualify, you will need 40 quarters of coverage (at least 10 years of Social Security earnings). Benefits are based upon your best 35 years of your indexed earnings. This means that the Social Security Administration takes inflation into consideration as they calculate your highest earning years. The maximum monthly benefit for 2007 is $2,116.

You can start receiving benefits as early as age 62, but at a reduced rate. For example, if your full retirement age, or FRA, is 65 and you start taking benefits at age 62, then your full benefit will be reduced by 20%.

Your FRA depends upon your birth date. If you were born before 1938, it is 65. Between 1943 and 1954, it is 66. And 1960 or later, it is 67.

If you were born between the years listed above, then your FRA is pro-rated on a monthly basis.