Milestone Money Website Logo

It’s All in the Timing: What to Think about when Claiming Social Security

For those approaching retirement, one of the most important decisions involves when and how to claim Social Security benefits. While the retirement income benefits provided by Social Security are available to anyone age 62 or older who meets certain requirements.

Share Our Post

What issues should i consider before i retire?

For those approaching retirement, one of the most important decisions involves when and how to claim Social Security benefits. While the retirement income benefits provided by Social Security are available to anyone age 62 or older who has:

  • worked and paid into the system for at least ten years, or
  • who has a spouse or, for unmarried persons, a deceased spouse or ex-spouse who qualifies for benefits,

certain options still exist that should be taken into consideration as a part of overall retirement planning. Let’s take a look at some of these important choices that will determine your benefits.

The longer you wait, the higher your benefit.

As mentioned above, if you qualify for retirement income benefits from Social Security, you can begin receiving them as early as age 62 (early retirement age, or ERA), but you may want to hold off. That’s because, if you elect to receive benefits starting at your ERA, your benefits will be at a reduced level, and they’ll stay there for the rest of your life. On the other hand, if you wait until full retirement age—FRA—you’ll receive your full benefit. For persons born between 1943 and 1954, full retirement age is 66. If you were born in 1955, your full retirement age is 66 years and 2 months. For 1956, add two months to the age for 1955 (and the same applies for years 1957–59; in other words, those born in 1959 reach full retirement age at 66 years and 10 months). For those born in 1960 and later, full retirement age is 67. But there’s still more. You aren’t required to begin taking your benefits at FRA; in fact the Social Security system offers a “reward” for waiting: each year you delay taking benefits after FRA, you’ll get an 8% “raise” in your benefit amount. So, a person born in 1960 who waits until age 70 to begin receiving benefits (in the year 2030) would receive 124% of the benefit they would have gotten at FRA. The benefit reaches its maximum at age 70, except for cost-of-living adjustments (COLAs) that the Social Security Administration approves from time to time.

What about spousal benefits?

For some married persons who may not qualify for benefits based on their own work record, it may be advisable to apply for spousal Social Security benefits. This is often the case for women who have spent years out of the work force in order to care for children or aging parents. Spousal benefits may be applied for as early as age 62, as long as the working spouse is eligible for benefits. Note that if the working spouse applies for benefits prior to FRA, the spousal benefit payable to the non-working spouse will also be reduced. Those who are considering spousal benefits should first check to see what benefits, if any, they qualify for on their own work record. The Social Security Administration will compare this with the spousal benefit payable, and will pay the higher of the two benefits (you cannot collect benefits on more than one earnings record: your own or that of a spouse). For unmarried persons who are widowed or divorced, spousal benefits are also available. Divorced persons who are not caring for a dependent child may claim benefits based on the ex-spouse’s record, as long as the marriage lasted at least ten years. Spousal benefits are generally 50% of the benefit payable to the working spouse. Note, however, that benefits paid to a surviving spouse who is at FRA are 100% of the deceased spouse’s benefits. It’s also important to know that claiming spousal benefits will not affect the benefit payable to the working spouse or ex-spouse.

Which benefit to claim?

For persons who can qualify for benefits both on their own record and on that of a spouse or ex-spouse, it’s important to compare the benefits payable in both cases and choose the one that pays the most. As far as the timing is concerned, you should consider various factors, including your earnings record and that of your spouse or ex-spouse, your overall health and retirement lifestyle goals, and, of course, your other sources of retirement income, such as pensions, retirement accounts, and other investments. For some persons, it may make more sense to begin claiming at age 62, even though the benefit will be permanently reduced. Others may choose to wait until age 70 in order to maximize the benefit.

Set up your free MySocialSecurity account.

You can also take advantage of a free online account by going to https://www.ssa.gov/myaccount/ and setting up an account. Especially for persons 50 and older, having an account set up makes it harder for identity thieves to falsely claim your benefits. And the account also give you access to easy-to-use online calculators, information, and benefit estimators. And you can easily check and verify your earnings record to see where you stand with your current and future Social Security benefits.

As you can see, there’s a lot to think about when making decisions about claiming Social Security benefits. This is where the assistance and guidance of a professional, fiduciary financial advisor can really make a difference, as you sort through the options that make the most sense in your individual case. At Milestone Money, our recommendations are always delivered with the client’s best interests foremost. To learn more, read our article, “Deciding the Best Age to Retire: A Comprehensive Guide.”

What issues should i consider before i retire?

Latest Posts

Retirement Your Way: Looking at Options

While it is true that the average life expectancy for American males is just over 73 years and almost 80 for American females, what many don’t realize is that additional life expectancy increases as we age.

Read More
Milestone Money Website Logo

Life is full of financial milestones. We pay for college, we get married, we start businesses. But the most important financial decision we will ever make is when and how to retire. Milestone Money helps you map success to and through retirement.

Email Us
Call Us
Visit Us