The Reich Report-When to Claim Social Security

Since April is National Social Security Month, I thought it would be helpful to cover when to claim your benefits and how to claim, which I’ll cover in next week’s article.  There tends to be an awful lot of advice flying around regarding when you should claim Social Security. The most common answer I hear from other advisors is that you should wait until age 70. That’s not always the case. It is important to realize that the benefit is intended to be the same based on actuarial life expectancy, whether you claim at age 62 or 70 or any month in between. The reality is that we don’t live to actuarial life expectancies, and that is what creates confusion around when to claim your benefits.

So why does everyone suggest waiting until age 70 before claiming benefits? For each year you delay taking your benefits beyond age 62 your benefits increase by 8% per year. That can add up to a very big difference in the total monthly benefit you can receive each month so for obvious reasons, that idea is very appealing to many people. Here are some factors to consider to help you determine when to claim.

1. Your health- This is the most obvious factor. The longer your life expectancy, the longer you should wait to claim benefits. The break-even for ages 62 vs.67 is age 78 and 79 and the break-even for 67 vs. 70 is age 82 and 83. This is the technically correct answer. It’s not to say that if you think you are going to live a long time you should necessarily wait until age 70. There are many other reasons to claim it earlier.
   
   
2. Your current savings- The amount of money you have saved for retirement is a major determining factor for when you should claim. The more you have saved, the longer you can potentially afford to wait before claiming SS. An 8% annual benefit increase is most likely more than you’re going to get on your conservative investments so take advantage of it. Conversely, if you haven’t saved a lot then you may need to take money earlier even if you expect to live a long time.
   
   
3. Your spouse’s SS benefits- Depending on what your spouse expects to receive in benefits may help determine both when and how you should claim your SS benefits. This includes ex-spouses if married for 10 or more years. Your spouse has the option of taking their own benefits or 50% of yours, whichever is higher.
   
   
4. Your lifestyle both now and in the future- What’s more important to you: getting a higher total benefit by waiting as long as possible or having use of the lesser benefit now when you can potentially enjoy it more? Again, even if you expect to live a long time, you may not care as much about having significantly more income at age 85 than you do at 67. If you plan to travel for example, then the money today may enhance your retirement experience more than it will at an age where you may not physically be able to do all of the things you can today.
   
   
5. Your spouse’s future needs- Though you may not expect to live a long time, you need to consider if your spouse will. This is particularly important if your benefits are dramatically different. Once you die, your spouse gets the higher of your Social Security or their own, not If you want to maximize the benefit to them, assuming you don’t have much life insurance, then you may want to consider waiting to improve their income for the remainder of their life.

As you can see, there are a lot of considerations surrounding when to claim Social Security, and therefore, you may want to consider discussing them with your financial advisor before you decide. Next week we will go into more detail surrounding how to file for Social Security benefits. 

Frequently Asked Questions About When to Claim Social Security

1. When is the best age to claim Social Security benefits?

While many advisors suggest waiting until age 70 to maximize monthly benefits, the “best” age depends on factors like your health, financial situation, and personal goals. The total benefit is designed to be roughly equal based on life expectancy, whether you claim at 62, 67, or 70.

2. Why do people recommend waiting until age 70?

For each year you delay claiming Social Security beyond age 62, your benefit increases by about 8% annually. This can significantly boost your monthly income later in life, making it an attractive option—especially if you expect to live longer or have sufficient savings to wait.

3. How does my spouse impact my Social Security decision?

Your spouse plays a major role. They may be eligible to receive either their own benefit or up to 50% of yours, whichever is higher. Additionally, after one spouse passes away, the surviving spouse receives the higher of the two benefits. This makes timing especially important if you want to maximize income for your spouse’s future.