5 Things Financial Advisors Tell Clients Before They Claim Social Security
Written by
Josephine Nesbit
Edited by
Zuri Anderson
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Social Security is a big milestone, but deciding when to claim isn’t just about age.
“Claiming Social Security is more than hitting a certain birthday. It is about stepping back and looking at the next chapter of your life,” explained Jacqueline Reeves, MFS, AIFA, PPC and director of retirement plan services at Bryn Mawr Trust Advisors, LLC. “Once you decide when to claim Social Security, the choice is largely permanent, so it deserves thoughtful planning.”
Before claiming Social Security, here’s what financial advisors say clients should consider.
Do You Need the Income?
According to Skip Skolnik, senior planner and founder at Skolnik Retirement Solutions, LLC, the first thing to consider when determining when to claim Social Security is whether or not you need the money.
“If at age 62, a client needs Social Security income to support their lifestyle, pay bills or reduce withdrawals from volatile investment accounts, then I encourage them to take it,” Skolnik wrote in an email statement. “In these circumstances, clients are using Social Security for exactly its intended purpose, income security in retirement.”
Make Sure You Understand Full Retirement Age
Reeves also makes sure her clients understand full retirement age (FRA), which is the age you receive 100% of your retirement benefit.
“For most people today, that’s age 66 or 67. You can claim as early as 62, but it may mean giving up as much as 30% of your benefit, permanently,” she explained.
But if you wait past your FRA, then you can boost your benefit up until age 70 by as much as 24%.
“That creates a higher, inflation-adjusted stream of income for the rest of your life,” Reeves added.
Think About the Broader Picture
Think about how your benefits fit into the broader picture, Reeves commented, especially for married couples.
“Your claiming decision can affect not just your own income, but potential spousal and survivor benefits,” she explained.
Reeves recommends looking at the numbers to determine which strategy maximizes lifetime income for the entire household and coordinating Social Security with other income sources, such as pensions, 401(k) plans, IRAs and Roth accounts, to create a withdrawal plan that supports your goals while managing taxes.
“Tax planning matters. Up to 85% of Social Security benefits can be taxed depending on your other income and rule changes,” Reeves added.
Consider the Break-Even Analysis
Another thing to consider is the break-even analysis, which is the age at which the total benefits you would receive by delaying your claim equal the amount you would have collected had you started claiming earlier.
“For many individuals, the break-even point for delaying until age 70 is somewhere in their late 70s to early 80s,” Skolnik wrote. “That math matters, especially when factoring in family health history, personal health and risk tolerance.”
Take Control of Your Assets
Claiming Social Security is also about taking control of your assets.
“Beyond the math, my philosophy is that you should control all the assets you can control and taking Social Security earlier gives you greater control, security and flexibility,” Skolnik commented.
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