When Should You Start Taking Social Security?

When it comes to claiming Social Security benefits, the options you have are varied and complex. You can begin collecting a reduced monthly benefit as early as age 62. If you wait until age 67, you get your full benefit. But if you wait until age 70 to claim your benefit, you get substantially more in each check.¹

So, what’s the smartest thing to do? Discuss it with your financial advisor.

While it might seem a simple choice, when to begin your Social Security benefit is a decision that will potentially have a major impact on your finances throughout retirement. And it’s important that you think through every option as you consider what’s best for your unique situation.

For years, economists and finance professors have been saying that everyone should wait until age 70 to begin taking Social Security.² According to accepted calculations, collecting it earlier would be leaving money on the table.

But more recent analysis has shown that deferring your benefit until age 70 might not make sense for many people.

As mentioned above, you can begin taking Social Security at age 62 with a reduced benefit. If you wait until age 67, you can collect your full benefit (calculated from your 35 highest earning years). And each year you delay until age 70 increases your monthly benefit by 8%. In each case your benefit level remains the same for the rest of your life.

Waiting until age 70 will net you the most in total benefits, but only if you live well past the average lifespan. Also, while you are waiting for your higher benefit, you would need to be able to live without that monthly income.

And then there’s life stage to consider. When you’re in your sixties, you’re more likely to be able to travel and enjoy other activities compared with your seventies, so you might want the income earlier.

But despite the apparent simplicity, it’s a complex decision. Andy Markowitz and Phil Pruitt, writing for AARP, sum it up well. “The question of when you can claim benefits is separate from a more important question: When should you claim benefits? The answer is complicated and depends on your job situation, family circumstances, and financial and physical health.”

It’s good that we have options when it comes to taking Social Security. To make sure you choose the timing that’s best for your unique situation, talk with your trusted advisor. Not only is he or she knowledgeable about claiming this important benefit, but they can help strategically integrate it with the other moving parts of your overall financial plan.

Source:
1. https://www.aarp.org/social-security/faq/when-can-you-start-collecting/
2. https://www.financialplanningassociation.org/learning/publications/journal/FEB24-it-may-be-mistake-delay-social-security-retirement-benefits-OPEN