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When Should I Start Collecting Social Security?

Determining when is the right time for me to start collecting Social Security benefits

The decision is a very complex one that is affected by marital status, health and other savings. A recent study by United Income (an online financial planning and investment management firm) found only 4% of retirees claim their Social Security benefits at the most financially optimal time. What factors should you consider? What are your options?


Which age you decide to start claiming benefits and the amount of income that you have earned over your lifetime will have vast impacts on the amount of monthly benefits you receive. The later in life that you begin collecting and the more income you have earned, the larger your check will be each month from Social Security.

There are also other factors to consider. How is your overall health and how long do you expect to live? Are you married? Will your spouse be dependent upon your benefit should you pass away? Do you have other savings and/or personal retirement accounts that you can draw from? We will now look at how these factors come into play when trying to decide among the three most significant options that can help you decide your optimal time to start collecting Social Security benefits.

The Big Three Options

Let's examine the three significant options that a lot of Americans struggle with when it comes to deciding when to retire and when to start drawing Social Security. By gaining a better understanding of these options, you can make a more informed decision while considering the factors in your life on when to draw and how to plan for that time.

Option 1: Draw reduced benefits at age 62

Most Americans are eligible to start collecting benefits as early as the age of 62. Typically, this is not the best option to maximize Social Security benefits. At age 62 benefits are reduced, which means you will be drawing less than you would if you wait until later when you reach full retirement age. At full retirement age, your benefits would not be reduced. If you do decide to claim benefits before reaching your full retirement age, the monthly benefits you receive will be permanently reduced for the rest of your life.

At age 62, it usually is hard to make a significant improvement in your lifetime earnings. However, if you have a spouse then you need to consider a couple of factors. Is it possible or even likely that he or she will outlive you? Will they be dependent upon this income? If you answer yes to those, then it may be an excellent strategy to delay taking Social Security. By delaying, the benefit paid to you and ultimately to the surviving spouse will be more substantial.

Option 2: Full benefits at full retirement age*

As discussed earlier, if you do not wait until your full retirement age, your monthly benefits will be reduced. However, if you wait until you reach your full retirement age depending on the year you were born, then your benefits won't be reduced. If you do not have a spouse, then when you take into account the average life expectancy of most people, the total lifetime benefits received by retiring at age 62 or full retirement age are financially similar. This should help relieve some of the stress of making the decision based on your age alone. Also, if you have other savings and retirement plans, then you can afford to claim benefits earlier since the total overall impact will not be as detrimental to your overall retirement budget.

Option 3: Retire anytime after full retirement age until age 70 for increased benefits

How long you expect to live is a huge factor to consider when exploring this option. Overall health, lifestyle habits, and family history are things to think about here. For people who have a shorter-than-average life expectancy, their total lifetime benefits could actually be less than claiming benefits starting at full retirement age.

Another factor to consider is how much earned income do you have and how does it impact your income tax situation. For people who plan to keep earning income after full retirement age and that do not need the funds from claiming Social security benefits, they can take advantage of the delayed retirement credit by accumulating more earnings which will increase the monthly benefit that they will receive when later claiming Social Security.

For married individuals, if you chose to delay your retirement benefit until age 70, you are increasing the potential future survivor benefit of your spouse. This is because the benefit a surviving spouse receives is 100% of either what the deceased spouse is receiving or entitled to receive at the time of their death. If married, when one spouse dies, the more significant monthly benefit continues to be drawn by the surviving spouse, and the smaller benefit stops.

Past age 70, your monthly benefit will not go up. Make sure you are signed up and ready to draw at age 70. You do have to file a claim! The Social Security Administration will not just automatically start sending you a check when you turn 70. Contacting the Social Security Administration and file to draw by age 69 and eight months is a good idea. This will allow time for your claim to process. Typically, this process takes three to four months. Also, the Social Security Administration will only pay a maximum of six months of retroactive benefits.

Consult with your CPA about what option might be best for you to consider. Sometimes your CPA may recommend bringing your financial advisor into the discussion to determine the best path for you and your spouse as well, if applicable when deciding when to claim your Social Security Benefits.

*Full retirement age is dependent on the year that you are born. For anyone born before 1938, the full retirement age is 65 years old. Full retirement age does a gradual increase to age 65 years and ten months for people whose birth years are from 1938 to 1942. Those whose birth year is from 1943 to 1954, full retirement age is 66. Again we see full retirement age gradually increase to 66 years and ten months for people who are born from 1955 to 1959. For everyone born in 1960 or afterward, full retirement age is 67.

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