Deciding when to claim Social Security is one of the most significant financial decisions you’ll make as you approach retirement. It’s not just about when you’re eligible—it’s about making a choice that’s in line and suitable with your overall financial plan and long-term goals.
For some, the decision is straightforward; for others, it depends on factors like savings, expected retirement age, tax planning, and even family longevity.
If you’ve ever wondered, “When should I start claiming Social Security?”, this discussion provides a thoughtful and practical foundation for finding the answer that’s right for you.
The Top 6 Things to Know About Social Security
A personal answer to this question depends on 6 key planning principles:
1. Eligibility & Age: Full Retirement Age (FRA) is currently 66 or 67 depending on your birth year. You can claim Social Security as early as 62, but your benefits will be permanently lower than if you wait until your FRA.
2. Delayed Retirement Credits: If you can afford to delay claiming Social Security, you can increase your benefit permanently (up to 8% per year if you wait until age 70).
3. Longevity Considerations: The higher monthly benefit doesn’t necessarily mean the highest financial value. We want to objectively consider personal and family longevity trends as well as your retirement nest egg and other potential sources of income. This complete picture helps gauge the optimal age at which you claim your Social Security.
4. Spousal Benefits: If you are the higher-earning spouse, delaying your benefits can maximize survivor benefits for your spouse, offering long-term financial protection.
5. Bridge Funds: Quite simply, do you need to claim Social Security to make your plan work sooner rather than later? If not, consider delaying. If you need those funds sooner, there’s no shame in it. Each situation is unique. Advising you on yours is what we’re here for.
6. Tax Strategy: Up to 85% of Social Security benefits may be taxable depending on your total income, so timing your claiming strategy to coincide with a reduction in other income sources can help minimize tax burdens.
Identifying Your Optimal Choice
To start to form an answer to the key question for yourself, you need to reflect on each of these six factors. It’s a decision best made with a complete picture of how Social Security fits into your assets and plan.
If this is a question you want to get more clarity on, we are here and welcome the conversation! The planning process exists to provide you with clarity about what you have, what you’ll need, and how it all comes together.