A Million-Dollar Decision: Choosing When to Claim Social Security

If you’re like many Americans, you might not realize that one of your largest retirement assets can be your Social Security benefit.

$1,000,000 $1,000,000 is the total lifetime Social Security benefit that many dual-earning couples can garner with a smart claiming strategy.2

Having a smart Social Security claiming strategy—which means that you use all of the complicated rules to your advantage—can make a substantial difference in your retirement finances. 

Ever since President Franklin D. Roosevelt signed off on the 1935 Social Security Act, most Americans have ended up pondering this critical question as they approach retirement:

“When should I start taking my Social Security?”

And yet, the “right” answer to this common query remains as elusive as ever. It depends on a wide array of personal variables. It depends on how Congress acts. It depends on how the unknowable future plays out.

No wonder many families find themselves in a quandary when it comes to taking their Social Security benefits.

Let’s take a closer look at how we find the right balance for you.

Check Your Benefits Long Before You Retire 

Your monthly Social Security benefit amount is calculated based on the number of years you have worked and the taxes you have paid into the Social Security program. 

The Social Security Administration tracks your eligibility for retirement benefits as “credits”. For example, you must have 40 credits to receive Social Security benefits. 40 credits are equal to approximately 10 years of reported work.¹

Consider double-checking your credits (and verifying your expected benefits) by setting up an online account with the Social Security Administration at www.ssa.gov/myaccount. 

Or, consider obtaining a quick estimate of your benefits by using their Benefits Calculator at www.ssa.gov/OACT/quickcalc.

What Age Should You Claim Social Security?

You can generally begin drawing Social Security benefits as early as age 62 (with the lowest available monthly starting payments) or as late as age 70 (for the highest available monthly starting payments). 

The age range of 62-70 is generally split up into three age categories: early retirement age, full retirement age, and delayed retirement age. 

• Early: The earliest age you can claim Social Security benefits is 62. However, if you claim Social Security early, you will be penalized for not waiting until your full retirement age.


• Full: This is the age when you are eligible to receive the full amount of your Social Security benefit. Full retirement age, also called "normal retirement age," was age 65 for many years. In 1983, Congress passed a law to gradually raise the age because people are living longer and are generally healthier in older age. The law raised the full retirement age beginning with people born in 1938 or later. The retirement age gradually increases by a few months for every birth year, until it reaches 67 for people born in 1960 and later. Calculate your full retirement age with the Retirement Age Calculator at www.ssa.gov. 


• Delayed: You can also delay the claim of your retirement benefits past your full retirement age and up until age 70. Each full year you delay, your unclaimed benefit increases by 8%. Inflation adjustments, such as the 2023-year inflation adjustment of +8.7%, are received in addition to the 8% delayed credit. Unclaimed benefits stop increasing at age 70, so there may not be any reason to delay the claim of benefits past age 70.

In raw dollars, waiting to claim Social Security works out to be the best deal for many families. 

+76% 76% is the increase in monthly benefits between claiming at age 70 versus claiming at 62.2

Some analyses have even factored in the cost of spending down other assets while you wait, rather than using them for continued investment growth.

The conclusion is usually the same: If you're healthy, waiting to claim your benefits tends to pay off for many families.

Your Social Security Claiming Age: A Balancing Act

However, you’re not “many families.” You’re your family. Your personal and practical circumstances may mean this general rule of thumb won’t point to your best choice.

Following are some of the most common factors that may influence whether to start taking Social Security sooner or later.

• Alternate Income Sources: First, and perhaps most obviously, if you have few or no alternate income sources once your paychecks stop, you may not have the luxury of waiting until you’re 70. You may need to start taking Social Security as soon as possible.

• Life Expectancy: To at least break even, if not come out ahead by waiting until age 70 also assumes you’ll meet or exceed the age the Social Security Administration estimates someone your age and gender is likely to reach, based on the averages. Even if you can afford to wait, you’ll want to factor in whether your health, lifestyle, and family history justify doing so.

• Estate Planning: Have you placed a high or low priority on leaving as much as possible to your heirs and/or favorite charities after you pass? Your preferences here may influence how, and from where you’ll spend down your inheritable estate, which in turn may influence the timing of your Social Security enrollment.

• Employment: How likely is it you’ll keep working until your full retirement age? Once you reach it, you can collect full Social Security benefits, even if you’re still working. But until then, your earnings may reduce your Social Security benefits.

• Marital Status: If you’re married, one of you has probably paid in more, one is likely to live longer, you may retire at different times, and your ages probably differ. All these factors can complicate the equation. You’ll want to consider the timing, rules, and outcomes under various scenarios—such as when and whether to take Social Security as an earner, the spouse of an earner, the widow or widower of an earner, or an ex-spouse of an earner—while also factoring in whether you and/or your spouse are still working prior to your full retirement ages, as described above. Ideal start dates for one scenario may not be ideal for another.

• Other Circumstances: Beyond your marital status, there are other factors that may influence your timing decisions if they apply to you—such as if you’re a business owner, you live abroad, you qualify for Social Security Disability, or your children qualify for Social Security benefits under your account.

• Income Taxes: Did you know that up to 85% of your Social Security income may be counted as taxable income? The timing of Social Security income should therefore be considered in light of other taxable items, including required IRA distributions, strategic Roth conversions, and the harvesting of capital gains. Medicare surcharge thresholds, beginning at age 65 and based on your income from two years prior (read more about this surcharge here) can also come into play. Bottom line, broad tax planning may influence the timing of your Social Security benefit as well.

Degrees of Control 

Clearly, there’s a lot to think about when deciding when to start taking Social Security. Whether you’re going it alone or with us, here’s one piece of advice that should help:

Control what you can. Let go of what you can’t.

What do we mean by that? There are many known factors you can include in your Social Security planning.

• You know your marital status.
• You can access your Social Security account and/or use a calculator to estimate your benefits.
• You can make educated guesses about your life expectancy, how long you’ll work, and so on.
• Also, if you’ve delayed taking Social Security past your "full" retirement age, you may be able to change your mind … to a point. You can file to collect up to six months of retroactive benefits if you end up needing the income sooner than planned.

You can use all of this planning information and more to make reasonable assumptions and timely decisions about when to take your Social Security benefits.

Weaving Social Security into the Fabric of Your Life

One of the most critical decisions you can make regarding your retirement is when you choose to claim Social Security. 

Whether you’re planning to file for Social Security or you’re already drawing it, we welcome the opportunity to help you and your family make good choices about when, and how to manage your available options. 

Ask us to show you where you stand.

We’ve gotten pretty good at building and incorporating Social Security benefits into our thinking and using the tools at hand to illustrate for clients, on a "what if" basis, their potential lifetime Social Security benefits.

If we can assist you, schedule some time with us at www.openwindowFS.com/connection.