Hundreds of books and articles have been written and a lot of software developed to answer the question many of us have: when should I start taking Social Security?

The rules of Social Security are complex. But the basics are simple:

• If you have worked and paid into the Social Security system for at least 10 years – or have a spouse who has – you are entitled to a monthly check (your primary insurance amount, or “PIA”), beginning at your normal retirement age, or “NRA”. Your NRA depends on when you were born, and ranges from 65 (born before 1938) to 70 (born after 1959).
• You can start taking Social Security as early as 62 or as late as 70. If you start early, your monthly check will be at least 25% lower than your PIA for the rest of your life.  If you wait to age 70, the check will be at least 24% higher than your PIA for the rest of your life.

So the question is: will you live long enough for it to be worth postponing beyond your NRA, or even worth waiting beyond the first opportunity to claim at age 62?

Mathematically, with a normal to long life expectancy, you will be better off taking benefits at your normal retirement age or later. Sadly, most people claim too early, resulting in a total lifetime benefit lower than they could have received if they had waited. This article has more detail: Marketwatch article on Social Security.

Here is a break-down of some general guidelines and factors to consider:

Life expectancy

Social Security suggests a man reaching age 65 today can expect to live to age 84, on average. For women, the age is 87. (1)

The goal is to have the greatest lifetime income. If you have a known health issue that will shorten your life expectancy or if you have a family history of shortened life expectancies, starting Social Security benefits early may make sense. It takes about 15-20 years to make deferring your Social Security after full retirement age a good deal.

If, by contrast, you have a history of celebrating 90(+) birthdays in your family, waiting until age 70 in return for the larger monthly payout will most likely provide the most overall income. If you live a healthy lifestyle, are highly educated, and have other behavioral traits that contribute to longevity, delaying your benefit may be the right answer. (2)

Marriage

If you are married, it impacts the decision on when to claim Social Security.

A spousal benefit is half of the other spouse’s normal retirement age benefit. When beginning benefits, a spouse will automatically be given the higher of his/her own benefit or the spousal benefit.

When a spouse passes away, the surviving spouse will receive the higher of his or her own benefit or their spouse’s benefit. For example, if a husband and wife were receiving benefits of $3,000 (he deferred his benefit to age 70) and $1,800, respectively, the wife would start to receive $3,000 instead of $1,800 at her husband’s passing for the rest of her life.

If you are married, you or your spouse has a normal to long life expectancy, and you are the higher earning spouse, deferring your benefits is often the best strategy. That’s because if you defer to age 70, you will get the higher benefit for your longer-than-normal lifespan, and/or your spouse will inherit your higher benefit for her longer-than-normal lifespan. Typically the lower earning spouse would take his/her own benefit at NRA, and switch over to the spousal benefit at the spouse’s passing.

Other considerations

Be aware: once reduced, always reduced. Taking your benefits before normal retirement age permanently reduces your benefits. You do, however, have 12 months to change your mind and pay back the benefits you have received if you started early. Taking benefits early can make sense when you have a shortened life expectancy or you are married and are the lower earning spouse.

In 2015, Congress changed some of the rules around claiming.
A link is here: New Social Security claiming rules.

If you aren’t sure …

If you are not sure, you should have a discussion with your financial advisor to determine the best strategy for your unique situation. Social Security is part of an overall financial plan, so make the decision taking into account your financial situation and your goals.

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Social Security Administration ssa.gov
2 Marten, Poon, Hadberg. “Behavioral Factors of Longevity” Journal of Aging Research Volume 2011

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