When Should I Start Taking Social Security?

Mar 10, 2019

When should you begin taking your Social Security benefits?

Should you opt to begin your benefits as early as possible, usually age 62? Or should you wait until your normal retirement age (NRA), which may vary from age 66 to 67 these days. Or you may want to wait until the last possible minute, age 70.  

The first thing to do … is get your facts straight.

You can start by going to www.ssa.gov, setting up an account and obtaining a report from Social Security of what your specific benefits will be at the various ages you can take them.

Before looking at the particulars of early or late benefits, I think it is helpful to determine what you are trying to achieve. Here are at least two objectives I’ve seen:

First, some people want to win the contest. They see themselves as having paid into the Social Security system for all their working lives, and now they want to get the most out of it. For them, determining when to take Social Security is all about winning – how can I game the system so I get the most out of the system?

Others just want to be done. These folks see Social Security as their ticket to the world of non-work. It feels a lot like free money, so why not take it now?

I would encourage another view. You should take Social Security in whatever way maximizes your happiness and security. Any other approach will see the motivation for the approach fade into the sunset, while the longer-lasting issues of happiness and security grow larger and larger over time.

Let’s consider broadly some options for when to take Social Security retirement benefits.

1. You could take them early. Age 62 is generally the earliest someone can begin taking Social Security retirement benefits. If you do choose to take benefits at 62 (or any time before the NRA), two bad things happen.

If you work and earn enough money, your benefits get hammered. It gets complicated, but for example, if a 63 year old starts taking Social Security benefits, and also works and earns more than $15,480 that year, he’ll give up $1 of Social Security benefits for every $2 he earns.

And even if you don’t work at a wage earning job, your benefit is reduced pro-rata for every month you retire prior to that NRA. For anyone born after 1960, their NRA is age 67.  So if you would have received $1,000 in monthly Social Security benefits at age 67, but decide to retire early (age 62), you’d be looking at a 30% reduction in benefits. Your monthly check would be closer to $700, rather than $1,000.

This is just one more reason to get your benefits statement from www.ssa.gov. It will give you the specific amount of your monthly benefit if you retire (1) at the normal retirement date, (2) take benefits early or (3) take benefits late.

This is a big topic, so let’s finish next week by considering what happens if you either choose to take benefits at the normal retirement age or choose to delay.

For now, just remember that your choice of what to do should not be based on a math formula, but on what you believe will make you the happiest.

Sometimes there’s a difference.