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When Should I Claim Social Security?

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Deciding when to begin claiming your Social Security benefits will depend on several factors, such as your personal health and financial standings. It's true that waiting to access benefits will increase your monthly payments down the road. But, full access will depend on your birth date and some may need to access benefits sooner. To help you better navigate this issue, below we’re examining the variables that could impact when you decide to begin claiming your Social Security benefits. 

Should You Delay Social Security Benefits?

Social Security benefits become accessible at age 62, but full retirement benefits will only be available once an individual reaches their full retirement age, determined by their birth date.1 Any benefits received before reaching your full retirement age are reduced by a percentage, also determined by birth date, ranging between 25 and 30 percent.1

According to the Social Security Administration, this percentage reduction is often permanent, meaning if you were to access benefits at 62, the percentage taken off of Social Security would remain, even after reaching full retirement age.2 If you were to wait longer than the full retirement age to access Social Security benefits, you would receive a retirement credit, a bonus percentage determined by how long you waited, up to a maximum age of 70.2 This annual increase can be significant (averaging approximately 8% per year delayed), so our general rule of thumb is wait to start your Social Security benefit until you need it.

Social Security and Taxes

It is possible for your Social Security benefits to be taxed. This may happen if the total of half your Social Security benefits plus any additional income is greater than the IRS’s base amount for your tax filing status.3

The current base amounts are:3 

  • Single or Head of Household: $25,000
  • Married Filing Separately: $25,000
  • Married Filing Jointly: $32,000

It’s important to note that for couples filing jointly, all taxable income earned by both spouses must be counted - even if one spouse does not yet receive Social Security benefits.

Consider Longevity

Receiving your Social Security benefits early may be beneficial for those with health conditions or a lower life expectancy. This option provides retirees with a steady source of income earlier, which could also benefit those who are no longer working and lack other income sources in retirement.

Alternatively, if you or your spouse have a family history of longevity and face few health problems, you may find it beneficial to hold off on collecting Social Security benefits until full retirement age. 

Working and Social Security Benefits

You can continue to work past your full retirement age. In fact, working longer can actually increase the total amount you receive in Social Security benefits.2 Remember to consider tax implications with this route, as a greater income may bring greater tax implications.

Your monthly benefits could be reduced if you work and collect benefits before full retirement or if you earn over the thresholds referenced above. The reduced amount, however, is calculated back into your benefits once you reach full retirement age.4

Considering the factors above, deciding when to receive Social Security benefits will depend on your personal financial circumstances. For the best guidance, schedule a call below to examine your options and determine the best course of action. Our preference is to optimize the Social Security decision within a comprehensive and personalized financial stress test.

  1. https://www.ssa.gov/benefits/retirement/planner/agereduction.html#:~:text=You%20can%20start%20receiving%20your,your%20benefit%20amount%20will%20increase.
  2. https://www.ssa.gov/pubs/EN-05-10147.pdf
  3. https://www.irs.gov/faqs/social-security-income
  4. https://www.ssa.gov/benefits/retirement/planner/whileworking.html

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.


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