Guidance for a Key Social Security Decision

Social Security benefits are more significant than many people realize. The amount you collect from Social Security could be $15-30,000+ per year, depending on your earnings history. As life expectancies increase significantly, Social Security benefits for a couple may be more than $1 million.

Social Security income is not subject to fluctuations and volatility like the stock market, which is a great source of stability in determining your financial future.

One key decision surrounding Social Security is when to start receiving benefits. This is the main topic of this post. For more information on other aspects of Social Security, please see our prior post, Social Security Basics: What you Should Know.

The earliest you can begin receiving Social Security retirement benefits is at least age 62. You must have earned at least 40 work credits during your lifetime, meaning you earned at least $4,800 per year for 10 years.

Your monthly Social Security benefits are based on “Full Retirement Age,” or FRA. This is the age when you can receive 100% of your Social Security retirement benefits.

  • Historically, this was age 65, but it is now gradually increasing to age 67.
  • For those born before 1943, FRA is before age 66.
  • For those born between 1943-1954, Full Retirement Age is age 66.
  • For those born between 1955-1959, FRA is 66 plus additional months.
  • If you were born in 1960 or later, your Full Retirement Age will be 67.

The age that you begin collecting Social Security determines the initial amount of benefits that you will receive for the rest of your life.  It is that important.

If you begin collecting before your Full Retirement Age (FRA), your benefits are permanently reduced. If you wait until after your FRA, your benefits will be greater.

  • If you file for early retirement payments at age 62, your monthly benefits will be permanently reduced to approximately 75% of the FRA benefit amount.
  • If you wait to receive benefits until after FRA, your benefits will increase by 8% per year, for each year after your FRA year, until age 70.
  • If you were born between 1943-54, delaying your benefits until age 70 will increase your monthly benefit to 132% of your FRA benefit amount.

Given the above information, why wouldn’t everyone just wait until age 70 and receive the maximum amount possible, based on their wage history? This is where financial planning and our advice can be so valuable.

We feel that this decision should be based on each person’s or family’s specific situation, and clearly not everyone should wait until age 70. We actually recommend that most people begin collecting Social Security well before age 70.

Though many articles encourage people to delay starting to receive Social Security for as long as possible, so many other variables should be considered that “one size fits all” advice should not be followed for this decision.

We recommend a comprehensive review of your full financial situation, as well as other non-financial factors. Key factors are when you want to retire, work part-time and your quality of life. If receiving your benefits earlier enables you to retire and that is a priority, then waiting years to receive Social Security does not make sense.

If you have any significant health issues or your family does not have a history of longevity, then you should not delay beginning to receive Social Security. As a rule of thumb, if you begin collecting around age 62 (or your earliest eligible age), you need to live longer than 82-83 for that decision to have been a “negative” one in terms of total lifetime benefits.

Even with longer life expectancy, no one can know if they will live until their early 80s. Thus, we feel that collecting early is a good and rational decision for many clients.As Social Security is a given, at least for decades, collecting your benefits could delay the need to withdraw/spend some of your other investable assets, if your Social Security benefits replace what you would have withdrawn from other sources.

We work with clients to evaluate both the financial and non-financial aspects of when to begin collecting Social Security. This is part of long term financial planning, which can be done many years before you reach your 60s. Along with the Social Security Administration’s projections, we have financial software to assist in planning for decisions like this. We would incorporate Social Security, along with your other assets and financial goals, to help you make this very personal and critical decision.

We remind you that there are many technical details regarding Social Security, including when you retire and your lifetime earnings. We recommend that you review our earlier blog post, as well as consult with a financial professional regarding your specific situation, in making this decision.


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