When to Take Social Security: The Complete Guide

If you’re about to retire, you may be wondering whether you should start claiming your hard-earned Social Security benefits now. Here are a few key factors to consider in making that decision.

When Can I Start Collecting Social Security?

The minimum age to claim benefits is 62. If you are turning 62 and need the income from Social Security to support yourself, then you can start claiming your benefits now. However, if you have enough other income to keep you going until you are older, then you may want to delay to increase the size of your monthly benefit.

What Is Full Retirement Age (FRA)?

In addition to how much you’ve earned over the years, the size of your monthly Social Security benefit depends on when you were born and the age when you start claiming—down to the month.

You’ll receive your full monthly benefit if you start claiming when you reach what Social Security considers your full retirement age (FRA), sometimes also referred to as “normal retirement age.” FRA was 65 when Social Security began, but it has been raised to 67 for anyone born in 1960 or later. To find your FRA, see the chart below.

Source: Social Security Administration

How to Calculate Social Security Benefits

Let’s say your FRA is 66. If you start claiming benefits at age 66 and your full monthly benefit is $2,000, then you’ll get $2,000 per month. If you start claiming benefits at age 62, which is 48 months early, then your benefit will be reduced to 75% of your full monthly benefit—also called your “primary insurance amount.” In other words, you’ll get 25% less per month, and your check will be $1,500.

That reduced benefit won’t increase once you reach age 66. Rather, you’ll continue to receive it for the rest of your life. It may go up over time due to cost-of-living adjustments (COLAs), but only slightly. You can do the math for your own situation using the Social Security Administration (SSA) Early or Late Retirement Calculator, one of a number of benefit calculators provided by the SSA that can also help you determine your FRA, the SSA’s estimate of your life expectancy for benefit calculations, rough estimates of your retirement benefits, individualized projections of your benefits based on your personal work record, and more.

What happens if you claim after your FRA?

If you wait until you’re age 70 to start claiming benefits, then you’ll get an extra 8% per year—or, in total, 132% of your primary insurance amount ($2,640 per month in the example above) for the rest of your life. Claiming after you turn 70 doesn’t increase your benefits further, so there’s no reason to wait longer than that.

The longer you can afford to wait after age 62 (up to 70), the larger your monthly benefit will be. Nevertheless, delaying benefits doesn’t necessarily mean that you’ll come out ahead overall. You also need to weigh in some other factors, including your expected longevity and whether you (or your spouse) plan to file for spousal benefits. You will also need to consider the tax, investment opportunity, and health coverage implications.

Your Likely Longevity

So much of our strategy on how to maximize Social Security retirement benefits depends on guesses as to how long we’ll live. Of course, any of us could die in an accident or get a dire diagnosis next week, but putting aside these unpredictable possibilities, how long do you think you’ll live? How are your blood pressure, cholesterol, weight, and other health markers? How long have your parents and other relatives lived?

If you foresee an above-average life expectancy for yourself, then you may come out ahead by waiting to claim benefits. If not, then you may want to claim your benefits as soon as you’re eligible.

To make an educated guess about when to claim, try doing a breakeven analysis. That will tell you when the total benefits that you would receive by waiting will begin to exceed the total that you would receive by taking benefits earlier. If, for example, you’d get $1,500 a month starting at age 62 or $2,000 a month starting at age 66, then you will have received roughly the same amount in total benefits by age 77 or so. At that point, the higher monthly benefits that you’d get as a result of waiting will begin to pay off.

The Social Security website will tell you that regardless of when you start claiming, your lifetime benefits will be similar if you live as long as the average retiree. The problem is that not everyone will have an average life expectancy, hence all the different claiming strategies.

Claiming Spousal Benefits

Because of the program’s spousal benefits, being married can further complicate the decision of when to take Social Security. Some divorced spouses are also entitled to benefits based on their ex-spouse’s work record.

Spouses who don’t qualify for their own Social Security

Spouses who didn’t work at a paid job or didn’t earn enough credits to qualify for Social Security on their own are eligible to receive benefits starting at age 62 based on their spouse’s record. As with claiming benefits on your own record, your spousal benefit will be reduced if you take it before reaching your FRA. The highest spousal benefit that you can receive is half of the benefit that your spouse is entitled to at their FRA.

While spouses get a lower benefit if they claim before reaching their own FRA, they will not get a larger spousal benefit by waiting to claim after their FRA—say, at age 70. However, a nonworking or lower-earning spouse may get a larger spousal benefit if the working spouse has some late-career, high-earning years that boost their benefits.

When a spouse dies

When one spouse dies, the surviving spouse is entitled to receive the higher of their own benefit or their deceased spouse’s benefit. That’s why financial planners often advise the higher-earning spouse to delay claiming. If the higher-earning spouse dies first, then the surviving, lower-earning spouse will receive a larger Social Security check for life.

When the surviving spouse hasn’t reached their FRA, they will be entitled to prorated amounts starting at age 60. Once at their FRA, the surviving spouse is entitled to 100% of the deceased spouse’s benefit or their own benefit, whichever is higher.

No more ‘file and suspend’

Note that the claiming strategy called “file and suspend,” which allowed married couples who have reached their FRA to receive spousal benefits and delayed retirement credits at the same time, ended as of May 1, 2016. However, spouses born before Jan. 2, 1954, who have attained their FRA may still be able to file a restricted application. It allows them to claim spousal benefits while delaying their own benefits up to age 70.

Taxes on Your Benefits

Your Social Security benefits may be partially taxable if your combined income exceeds certain thresholds. Regardless of how much you make, the first 15% of your benefits are not taxed.

The SSA defines combined income using this formula:

• Your adjusted gross income + nontaxable interest (for example, municipal bond interest) + half of your Social Security benefits = your combined income

If you file your federal tax return as an individual and your combined income is $25,000 to $34,000, then you may have to pay income tax on up to 50% of your benefits. If your combined income is more than $34,000, then you may have to pay tax on up to 85% of your benefits.

If you’re married, filing a joint return, and your combined income is $32,000 to $44,000, then you may have to pay income tax on up to 50% of your benefits. If your combined income is more than $44,000, then you may have to pay tax on up to 85% of your benefits.

An example of taxed benefits

Let’s say you receive the maximum Social Security benefit for a worker retiring at FRA in 2021: $3,148 per month. Your spouse receives half as much, or $1,574 a month. Together, you receive $4,722 a month, or $56,664 per year. Half of that, or $28,332, counts toward your combined income for determining whether you have to pay tax on part of your Social Security benefits. Let’s further assume that you don’t have any nontaxable interest, wages, or other income except for your traditional individual retirement account’s (IRA’s) required minimum distribution (RMD) of $10,000 for the year.

Your combined income would be $38,332—half of your Social Security income, plus your IRA distribution—which would make up to 50% of your Social Security benefits taxable, because you’ve exceeded the $32,000 threshold. Now, you may be thinking, 50% of $56,664 is $28,332, and I’m in the 12% tax bracket, so the tax on my Social Security benefits will be $3,399.84.

Fortunately, the calculation takes other factors into account, and your tax would really be a mere $225. You can read all about the taxation of Social Security benefits in Internal Revenue Service (IRS) Publication 915.

Tax considerations for Social Security benefits

How do these tax considerations affect when you should apply for Social Security benefits? At today’s marginal tax rates, they may not have much of an impact on most people. Still, tax rates and income thresholds can change, so it’s worth remembering that you will lose less of your Social Security to taxes if you are in a lower marginal tax bracket when you begin to collect.

You should also note that if you decide to return to work, even part time, and aren’t yet at your FRA, then your Social Security benefits may be temporarily reduced. The reduction is $1 for every $2 of earned income over $18,960 (in 2021). During the year when you reach your FRA, your benefits will be reduced by $1 for every $3 in income over $50,520 (in 2021) until the month when you become fully eligible. That money isn’t lost, however. The SSA will credit it to your record when you reach your FRA, resulting in a higher benefit.

Investing Your Benefits

Are you a disciplined, savvy investor who thinks you could earn more by claiming early and investing your benefits than by claiming later and receiving Social Security’s guaranteed higher benefits? Then you may want to claim early instead of waiting until age 70.

Most investors, however, are neither disciplined nor savvy. People take early benefits intending to invest the money, then use it to tour Europe or pay everyday bills instead. Even savvy investors can’t predict how their investments will perform, especially in the short term.

If you claim early, invest in the stock market, and average an 8% annual return—which is far from guaranteed— then you almost certainly will come out ahead compared with claiming late, according to an analysis by Dan Caplinger, director of investment planning for The Motley Fool. However, if your returns are lower, if you receive reduced Social Security benefits because you continue working past age 62, if you have to pay taxes on your Social Security income, or if you have a spouse who would benefit from claiming Social Security benefits based on your record, then another Caplinger analysis suggests that all bets are off.

In other words, most people will not benefit from this strategy. Still, it’s good to know in case you’re not most people.

Timing and Your Health Coverage

Your health insurance coverage can also play a role in deciding when to claim Social Security benefits. Do you have a health savings account (HSA) to which you would like to keep contributing? If so, note that if you’re age 65 or older, then receiving Social Security benefits requires you to sign up for Medicare Part A, and once you sign up for Medicare Part A, you’ll no longer be allowed to add funds to your HSA.

The SSA also cautions that even if you delay receiving Social Security benefits until after age 65, you might still need to apply for Medicare benefits within three months of turning 65 to avoid paying higher premiums for life for Medicare Part B and Part D. If you are still receiving health insurance from your or your spouse’s employer, however, then you might not yet have to enroll in Medicare.

The Bottom Line

You don’t have to take Social Security just because you’re retired. If you can live without the income until age 70, then you will ensure the maximum payment for yourself and lock in the maximum spousal benefit. Just be sure that you have enough other income to keep you going and that your health is good enough that you are likely to benefit from the wait. When you’re ready, you can apply for benefits online, by phone, or at your local Social Security office.