One of the top variables in planning for retirement is determining at what age to being to claim your Social Security benefit. There is no single correct answer as this is not a one size fits all issue. There are several factors that weigh into such a decision including your current financial position, personal health and your family’s history of longevity (or lack of it). It’s well understood that deferring access to benefits will increase your monthly payments however this may not be a viable option for everyone. In an effort to provide some clarity around this important issue I want to examine the various considerations that should carry weight in your decision as to what at age you should begin claiming your Social Security benefits.

Should You Delay Social Security Benefits?

Social Security benefits become accessible, at a reduced rate at age 62. The reduced rate is determined by your date of birth and may be as low as 25-30% of what you are otherwise entitled to. 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

Full retirement benefits meaning the non-reduced benefit you’re entitled to will only be available once an individual reaches their full retirement age, determined by their birth date.1

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 Beyond age 70, there is little to no incentive to continue to defer.

The pros and cons of claiming Social Security at various ages is best illustrated here c/o JP Morgan Asset Management:

This graphic illustrates these trade-offs for people whose Full Retirement Age (FRA) is 66. Delaying benefits results in a much higher benefit amount: Waiting to age 70 results in 32% more in a benefit check than taking benefits at FRA. Likewise, taking benefits early will lower the benefit amount. At age 62, beneficiaries would have received only 75% of what they would get if they waited until age 66. FRA for individuals turning 62 in 2021 is 66 and 10 months, and FRA will continue to move 2 more months in 2022, when it will reach and remain at age 67.

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.

Investment Opportunities

The benefits of waiting are clear. But for some, withdrawing Social Security benefits early could bring a greater advantage. Investing Social Security funds has the potential to bring a greater return, as long as the performance of the investment exceeds the penalty suffered by accessing the Social Security benefit before your Full Retirement Age.

If this is something you are considering, you’ll want to work with me to closely examine if this is a wise idea and to develop a extrapolates how various scenarios could play out.

Working and Social Security Benefits

You may 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 a threshold. The reduced amount, however, is calculated back into your benefits once you reach full retirement age.4

All things considered, determining when to receive Social Security benefits will depend on your personal financial circumstances. For the best guidance, contact me to examine your options and determine the best course of action.


This content is developed from sources believed to be providing accurate information and provided by MBAM. 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.