Timing Your Social Security

People turning 62 this year will have a big decision to make. Will they take Social Security benefits early, wait till full retirement age or wait until they turn 70, when they will receive greatly enhanced benefits?

There is no one strategy for Social Security; every case is unique. Many people take Social Security early because they need the money – perhaps the result of not saving enough or an unexpected early retirement.

Social Security Facts

Some 27 percent of Americans take Social Security at 62, receiving an average monthly benefit of $1,287.61, according to Bank Rate. About 25 percent waited until full-retirement age (66 last year). Their checks averaged $2,039.86, Bankrate reported, using Social Security annual data.

Social Security by the Numbers

Age	Number (percentage of total)	Average benefit
62	807,587 (27.3%)	$1,287.61
63	222,908 (7.5%)	$1,510.29
64	238,163 (8.0%)	$1,625.03
65	388,996 (13.1%)	$1,874.56
66	1,182,692 (24.7%)	$2,039.86
67	122,918 (4.1%)	$2,399.86
68	74,743 (2.5%)	$2,594.74
69	66,638 (2.2%)	$2,806.90
70-74	302,327 (10.2%)	$3,065.48
75+	6,317 (0.2%)	$1,185.00

(According to Bankrate, some Americans filed at age 75 or later, perhaps because they didn’t know about the rules or because they had not accrued enough work credits to participate. Typically, it requires 10 years’ worth of work to file.)

Collect Social Security later?

Most Americans know that you can take Social Security as early as 62, but your benefits will be greatly reduced. For every year that you wait after 66 your monthly benefits increase by 8%. There is no monetary advantage to waiting past 70.

Whichever choice you make, it is critical that your decision be part of your larger financial plan for retirement.

First, for people 55 to 60 who plan to take Social Security early because they are worried it won’t be around long-term should relax.

“They really don’t have anything to worry about in terms of their Social Security benefits that they were promised not being there or (benefits) somehow being watered down, or somehow, that commitment might not be honored, because of solvency issues,” says Russell Hackman, president of Hackmann Wealth Partners in Boston, Massachusetts. “I tell people that they should not worry about that. It can be fixed by legislation.”

“And one of the things that I say is, look, the government can conjure up $3, $4 or $5 trillion dollars for COVID, basically out of thin air, then you better believe that they’re going to conjure up money to keep Social Security and honor those commitments.”

“Seniors vote,” Hackman adds, “you know, it is a very bad move to be in office when you start cutting Social Security benefits. I just, I don’t think it’s going to happen in a a million years, personally.”

Secondly, there is no one size fits all recommendation for the right age to begin Social Security benefits.

Some financial planner strongly believe you should wait until 70, when you can maximize your benefits. But few people can afford to wait that long. Not everyone has a family history of good health and longevity that would make them confident that they will live long enough to enjoy the benefit at a later age.

“If people are retiring pretty young let’s say, younger than 65, it’s hard to wait until 70,” says Hackmann. “And even if you have plenty of money, it’s hard to wait till 70. So, I try to tell people to get to at least 67.”

Hackman does, however, recommend to couples that at least one of them wait to take their benefits.

It’s not necessarily be a good idea to take Social Security benefits while you’re still working.

“I think the Social Security’s decision is a personal decision,” Hackmann says. “Even, when you try to mathematically analyze what the smartest thing to do, it’s your life. So, obviously, if you take it before 67, you’ve got to be careful that you’re not earning too much money, or they start to penalize your benefits. So, I really do encourage people to wait until they stop working.”

In 2024 if you earn more than $22,320 and take Social Security before full retirement age, the agency will subtract $1 from your monthly check for every $2 you earn above that limit.

Your Social Security strategy should be a part of your larger financial plan.

“Your Social security, decision making should be made in the context of an overall financial plan,” notes Hackmann. He said pre-retirees should work with a financial planner to understand all the ramifications. “You need to sort of integrate your Social Security strategy with your financial plan.”

YOUR TURN

Are you satisfied with your Social Security timing decision?  Are you waiting to claim? Share your thoughts in the comments!

 

Rodney A. Brooks is an award-winning journalist and author. The former Deputy Managing Editor/Money at USA TODAY, his retirement columns appear in U.S. News & World Report and Senior Planet.com. He has also written for National Geographic, The Washington Post and USA TODAY and has testified before the U.S. Senate Special Committee on Aging. His book, “The Rise & Fall of the Freedman’s Bank, And Its Lasting Socio-economic Impact on Black America” was released in 2024. He is also author of the book “Fixing the Racial Wealth Gap.” His website is www.rodneyabrooks.com

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