Timing the start of your Social Security retirement benefits can be challenging
Whether you’ve had a strategy for retirement for years or only recently started thinking about it, one thing is almost certain: You’re planning on Social Security benefits as part of your retirement income. But when should you claim your benefits?
While many people wait until they glimpse retirement on the horizon before they look more seriously at timing, that’s not ideal. “I like to have conversations with my clients about timing when they’re in their 50s,” says Thrivent financial consultant Travis Rose, from Antigo, Wisconsin. “That way, we can do additional retirement planning, and it takes the pressure off making a rushed decision.”
Mike Fuehrmeyer, a Thrivent financial consultant in Bloomington, Illinois, agrees. “The goal for timing is to maximize the amount of retirement benefits you can get, minimize your tax liability, and meet your needs,” he says. “That’s different for everyone.”
Even if you’re on retirement’s doorstep, you should still consider all your options because Social Security is a complicated, nuanced program. The questions we pose here should help you understand how it works and how the rules might apply to your situation and needs. Then you can dive into it more deeply with your financial advisor.*
Social Security basics
Your eligibility for Social Security retirement benefits is based on a system of credits. You earn four credits each year that your income reaches a minimum set by Social Security (for 2022, it’s $6,040). You must earn 40 credits over your working years to be eligible.
You can start receiving Social Security retirement benefits at age 62. But if you do, you’ll receive less than you would at “full retirement age,” which is 66 or 67, depending on the year you were born. At full retirement age, you should get 100% of the retirement benefits you’re eligible for.
If you can wait until you’re 70 to claim Social Security, your benefit can be even more. Between full retirement age (66 or 67) and 70, your benefit grows 8% each year. There are no increases past age 70, although Social Security does adjust payments each year for inflation.
You’ll receive Social Security retirement payments for the rest of your life, but remember this: “Once you start, that benefit amount is typically set for life, meaning it won’t go down,” says Fuehrmeyer. However, there are situations where your benefit may increase.
What’s your benefit amount?
Knowing your estimated Social Security benefit is critical when planning for your retirement. Fortunately, it can be easy to find that number: Go to ssa.gov and look at your Social Security statement. The report shows what you’d receive (before taxes) at several key retirement ages: 62, 66 or 67 (full retirement age), and 70. The amount of the benefit essentially is based on your 35 highest-earning years. If you haven’t worked 35 years, the missing years are set at $0.
It’s a good idea to review your statement annually throughout your career to make sure the income amounts in your work history are accurate. If you find errors, you should report them to Social Security.
To access the report, you’ll need to create a username and password. When you do that, you’re also creating a side benefit: some identity theft protection.
“When you set up your account,” says Fuehrmeyer, “you’re basically helping prevent thieves from creating an account under your name.”
What’s your life expectancy?
No one knows how long they’ll live, but part of deciding when to start Social Security requires making a guess about this. Why does it matter? If you’re age 62, you're basically healthy, and longevity runs in your family, you might wait until full retirement age or even age 70 to start, so you can maximize your benefits.
On the other hand, if you’re 62 and have health issues you think may shorten your life, you could decide to claim benefits as soon as possible, thinking you won’t have as many years to receive them.
“A client of mine decided to start his retirement benefits at age 66,” says Fuehrmeyer. “He recently had a liver transplant and believes he has a life expectancy of eight to 10 years. For him, it made sense to start his benefits at full retirement age.”
A client of Rose’s, Jerry McGee, from White Lake, Wisconsin, was diagnosed with distal muscular dystrophy when he was 62. He chose to start benefits soon after because he was finding it hard to work. His wife, Laurie, retired a couple of years later. Since then, they’ve focused on enjoying these years, spending time with family, and traveling and sightseeing around their region in a convertible they purchased.
“It’s not just about how long you live,” says McGee. “It’s also about how long you have quality of life.”
The goal for timing is to maximize the amount of retirement benefits you can get, minimize your tax liability, and meet your needs. That’s different for everyone.
Are you married?
There are two key benefits for married couples to consider when thinking about when to claim benefits:
If you’re at least 62 and your spouse has started to receive Social Security, you may be able to claim spousal benefits. The amount could be as much as 50% of your spouse’s benefit, depending on your age. This applies whether or not you are eligible for your own Social Security benefit. If you are, you will receive the higher amount, your own or the spousal benefit.
If you have a child under age 16 or with disabilities, you potentially can claim a spousal benefit before age 62, as long as your spouse has claimed benefits.
This is paid to you when your spouse dies, typically if you’re at least 60 and your spouse had been receiving or was eligible to receive Social Security benefits.
There are several factors that can affect the amount of the survivor benefit you would receive, including the age at which the deceased claimed Social Security.
If both of you were receiving Social Security payments upon your spouse’s death, you wouldn’t continue to receive both benefits. But you would get the higher of the two.
“This is why I encourage a married couple, if suitable, to hold off claiming the higher of their Social Security benefits until they’re 70,” says Rose. “That way, the surviving spouse will get the maximum amount.”
Are you divorced?
If you’re divorced, you may be eligible to claim spousal benefits based on your ex-spouse’s income. You must have been married for at least 10 years, are now single and you and your ex-spouse are age 62 or older. The divorce must have occurred at least two years prior if your ex-spouse is not receiving benefits at the time of the divorce. From there, the benefits depend on the year you were born:
If you were born on or before Jan. 1, 1954:
You can claim a benefit based on your ex-spouse’s earnings. Your own benefit could continue to grow by 8% each year between age 66 and 70, at which time you have the option of switching to begin receiving your own benefit.
If you were born on or after Jan. 2, 1954:
You can file for retirement benefits, but you will receive the higher of your own or your ex-spouse’s, and that is your benefit for life.
If your ex-spouse has died and you’re, typically, at least 60, you may be eligible to receive survivor benefits based on that person’s earnings. You then have the option of switching to your own benefit starting at age 62 or waiting until age 70 to benefit from the delayed retirement credits. Or you could start your own benefit at age 62 and switch to receive a survivor benefit at full retirement age.
How long do you plan to work?
Do you want to retire in your 60s, or do you plan to work until you’re 70 or beyond? Typically, the longer you work and delay claiming Social Security, the higher your benefit, up until age 70. If you want to stop working before age 70, one option is to create income from your retirement savings that would allow you to hold off starting Social Security until age 70.
If you want to work and also start receiving Social Security, your benefits will be reduced until you reach full retirement age:
- In 2022, for every $2 you earn over $19,560 while below full retirement age, you’ll lose $1 in benefits paid to you.
- In the year you reach full retirement age, for every $3 you earn over $51,960, you’ll lose $1 in benefits paid to you.
- Once no longer subject to excess earnings, your benefit amount is recalculated to give you credit for the months Social Security was reduced because of excess earnings.
Once you reach full retirement age, you can claim Social Security and earn additional income with no reduction to your benefit.
How do taxes factor into when you claim Social Security?
As you consider when to claim Social Security and the amount you’ll potentially receive, keep in mind that it may be subject to federal income taxes. Currently, the amount taxed varies with how much total income you receive:
- If total income is $25,000 to $34,000 for a single filer ($32,000 to $44,000 if married filing jointly), you’ll be taxed on up to 50% of your benefit.
- If total income is greater than $34,000 for a single filer ($44,000 for a couple), up to 85% of your benefit is taxable.
In addition, you may need to pay state income taxes on your benefit, depending on where you live (currently 13 states tax Social Security). Talk with a tax professional for specific guidance about your potential income tax liability.
How can you increase your benefit?
If you’re still some years away from retirement, you may be able to maximize your benefit by taking these steps:
- Check your Social Security report. Make sure that it accurately reflects your earnings.
- Work more years to raise the 35-year average. Remember that your benefit is based on the top-earning 35 years of your life. You might want to consider working more years at your current salary to replace some of the leaner years’ earnings earlier in your career.
- Hold off on claiming benefits until you’re of full retirement age. If you wait even longer—until age 70—you’ll get the maximum amount.
- Minimize taxes. Structure your retirement strategy so that you reduce the recognition of income that triggers Social Security income taxation, such as paying off debt, setting up a deferred-income annuity, or creating a charitable fund.
If you come to a decision about when to start Social Security, remember that circumstances in your life can change, as can Social Security rules. “You should revisit your plans for timing,” says Fuehrmeyer, “and after you start Social Security, you should review your retirement strategy on a regular basis.”
While Social Security is thought of as a retirement program, unmarried children up to age 18 (or 19 if still in high school) are eligible to receive Social Security benefits when a parent files for their own benefit or dies. A disabled child also is eligible at any age provided the disability occurred before age 22. Even grandchildren and stepchildren may qualify.
Each child could receive payments, which are as much as 75% of what that parent’s benefit would have been at the time of death. But there is a maximum that a family can receive that could limit what each child gets.
Take the next steps
For more information on Social Security retirement benefits, visit the
To help you with assessing your specific situation, reviewing your options using several planning tools, and making decisions about timing your benefits, connect with a
Author Kathleen Childers is a writer in Minnesota.