When Is the Smartest Time to Take Your Social Security Check?


Wondering the best age to take Social Security benefits? The simple answer is age 70, if you’re looking for the largest monthly payment. But this might not be the best answer for you.

As 2016 dawned, the typical Social Security check was $1,341, according to the Social Security Administration. And the SSA’s Annual Statistical Supplement says that in 2013, 48 percent of women and 42 percent of men claimed their monthly annuity at the early age of 62. But take the statistics with a grain of salt as you examine your own situation.

“The smartest time to collect Social Security is after you’ve waited as long as possible,” said Benjamin Brandt, a Bismarck, N.D.-based financial advisor and host of Retirement Starts Today Radio. “Social Security offers benefits you can’t outlive, benefits indexed to inflation, as well as spousal benefits. All of these benefits increase the longer you wait to claim benefits.”

Uncovering the smartest time to take your Social Security check requires some analysis. Here’s what you should consider.

When Can You Start Earning Social Security Benefits?

According to the SSA website, you can begin receiving a Social Security annuity as young as age 62, or as late as you would like. The benefit increases each year you wait to claim Social Security up to age 70, when the benefit levels off. If you claim Social Security between age 62 and your full retirement age, you’ll receive reduced payments.

Find Out: Why Social Security Should Not Be Your Retirement Plan

The SSA website explains the penalty for claiming benefits before your full retirement age. Your benefit is cut five-ninths of 1 percent for each month you receive your check prior to the full retirement age for up to 36 months. Claim earlier than 36 months before full retirement age, and you’re out another five-twelfths of 1 percent per month.

Are You Retirement Ready?

Your full retirement age depends upon your birthday. Those born in 1937 and earlier hit full retirement at age 65. Those born in 1960 and after won’t reach full retirement until age 67. The full retirement age adjusts incrementally for birth years between 1938 and 1960.

How Much Can You Save by Waiting to Retire?

Your Social Security benefit grows each year you wait to claim benefits between the ages of 62 and 70. Between age 62 and full Social Security retirement age, you’ll get a credit for waiting to claim benefits until full retirement age. Here are just a few examples of the credits you can get:

  • Born between 1917-1924: Credit of 3% per year
  • Born between 1933-1934: Credit of 5.5% per year
  • Born in 1943 or later: Credit of 8% per year

Check out the SSA website to find out the credit for waiting to claim between age 62 and full Social Security retirement age.

If you wait until age 70 to claim your Social Security benefits, you’ll receive a greater monthly payment at that time, and the amount will stay constant at the higher level for the remainder of your life.

On the other hand, here’s the financial pain you can expect for claiming Social Security before your full retirement age. According to the SSA website, if your full retirement age is 66, claiming your benefit early will reduce your benefit as follows:

  • Age 62, reduced by 25%
  • Age 63, reduced by about 20%
  • Age 64, reduced by about 13.3%
  • Age 65, reduced by about 6.7%
Are You Retirement Ready?

If you were born after 1954, and you claim your payment before full retirement age, you’ll suffer even greater reductions in the monthly amount when claiming Social Security early.

Factors to Weigh When Deciding to Take Social Security

By now, it probably seems like a no-brainer to wait until age 70 to claim Social Security benefits. At age 70, you receive the highest possible monthly Social Security benefit — and it’s locked in for the rest of your life.

Yet, waiting to age 70 might not be the best decision for you. Claiming Social Security at 70 is a good decision if:

  • You have funds to support yourself before age 70 that come from a job, retirement accounts, or other savings and investments
  • You expect to remain healthy and live a long life

Otherwise, it might make sense to claim Social Security benefits earlier. Your life expectancy, health and available financial resources come into play when considering when to apply for Social Security.

When to Claim Social Security Benefits Early

You might not have the luxury of waiting to claim Social Security benefits to snare the largest monthly payment. The National Bureau of Economic Research reports that those who claim early Social Security benefits early typically have worse health. They also have shorter life expectancies — and they tend to die earlier.

So, if you have health problems, claiming your Social Security benefit early might be a wise choice. If you take your check as soon as Social Security eligibility kicks in, there might be an added benefit: Taking your check early gives other retirement assets a longer time to grow and compound tax-deferred. That can preserve your other financial assets and give you a larger nest egg from which to draw in later years.

Are You Retirement Ready?

Ask: 5 Questions You Should Ask About Social Security

The Best Time to Claim Benefits Is the Right Time for You

The SSA website can help you decide when to claim Social Security benefits. Visit the Social Security calculators and plug in various scenarios. You can investigate potential life expectancy scenarios to figure out how long you might expect to live.

For example, Simone, a 52-year-old woman, in good health can expect to live until age 85.6.

The early or late retirement calculator gives you more data to uncover the best time to claim your Social Security benefits.

If Simone, born on July 15, 1964, retires at age 62, she will receive a benefit 30 percent smaller than the one she would have received had she waited until her full retirement age.

Ultimately, choosing the best time to claim retirement benefits comes down to figuring out potential life span expectations, examining your current financial situation and deciding when you want your lifetime annuity to begin.

Social Security is like an insurance policy that protects your financial well-being. The monthly payment makes certain you won’t end your life without any income.

Ultimately, you get penalized for taking Social Security benefits before your full retirement age, or you get bonus for waiting until after full retirement age for your cash. Yet, there’s more that goes into the equation.

“Mathematically, there’s no doubt that it pays to wait to claim your Social Security benefit at full retirement age or later,” said Jude H. Wilson, chief financial strategist at Wilson Group Financial in Orlando, Fla. Doing so increases your base income, he said.

Are You Retirement Ready?

However, Wilson acknowledged there are real-world situations that make it impossible or undesirable to wait. “If your Social Security benefit makes the difference between being able to pay your electric bill or some other necessity, then of course you should take your benefit early,” he said.

Keep Reading: The First Thing You Should Do With Your Social Security Check


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