When Is the Best Time to Take Social Security?

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The old saying that timing is everything certainly applies when you’re talking about when to take Social Security!

Study: Taking Social Security Too Early Could Cost You $100,000+

A new study from United Income, a technology wealth management company, finds that for most people it’s not really a question of if you’ll be able to retire. It’s more a question of when to take Social Security. And unfortunately, too many workers arrive at the wrong answer to that question.

Their research shows 57% of retirees would be better off taking Social Security at age 70 than at any earlier age. Most people, however, claim at age 62, which is the earliest you can possibly take Social Security.

But taking it that early means you only get a partial benefit. By waiting, you instead get a buildup in benefit of about 8% every year until your benefit caps out at 70.

Here are some other findings from the United Income research:

  • $111,000 is the average income per household that you forfeit by claiming Social Security too early
  • Claiming at the wrong age means forgoing $68,000 in estimated wealth
  • Only 4% of retirees claim at the optimal time

Wondering When to Take Social Security? Use These Calculators to Find Out!

There are a lot of reasons why people may not be able to wait until 70 to start taking Social Security. These can include health issues, the inability to find work and even overwhelming debt.

If you can’t wait until 70, it’s best to at least wait until your full retirement age to claim your benefit. Click here to find your full retirement age.

Meanwhile, there are a lot of free calculators available to help figure out the best time to take Social Security based on your individual circumstances.

Official Calculators From the Social Security Administration

Screenshot of Social Security Retirement Estimator online calculator
Screenshot of Social Security Retirement Estimator online calculator
  • Retirement Estimator – Offers estimates of your benefit based on your actual Social Security earnings record
  • Quick Calculator – Shows your benefit estimate in either today’s dollars or inflated future dollars
  • SSA Online Calculator – Crunches your annual earnings from 1951 to 2018 to give a detailed projection
  • Detailed Calculator – This one is strictly for retirement wonks, as it “produces the “primary insurance amount” (PIA), “maximum family benefit”, the actuarial reduction or increment factor (for early or delayed retirement), and the monthly benefit amount (MBA)”

Third-Party Calculators

Fidelity Investments Social Security calculator screenshot
Fidelity Investments Social Security calculator screenshot

Running a Projection

In general, you want to take your Social Security benefits later rather than sooner. But if you’re 62 and don’t have a job or the possibility of any future income, then you’d probably want to take Social Security as soon as possible.

For detailed guidance, your best bet is to try one of the calculators listed above. We ran a couple of scenarios using the Fidelity calculator to determine when a married 60-year-old man making $80,000 annually should start taking Social Security:

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Age Expected Longevity Lifetime Benefit
62 (earliest you can claim) living into your 90s $691,416
66 (full retirement age) living into your 90s $828,580
70 (when your monthly benefit maxes out) living into your 90s $926,100

In this scenario, it would make sense to wait to claim to maximize your lifetime benefit. If you don’t wait, you could miss out on an estimated $234,684!

However, the opposite is true is you don’t have a lot of longevity in your family and only expect to live to be in your 70s. Using the same hypothetical worker (60, male, earning $80,000), you’d be better off claiming as soon as you can:

Age Expected Longevity Lifetime Benefit
62 (earliest you can claim) living into your 70s $272,376
66 (full retirement age) living into your 70s $243,700
70 (when your monthly benefit maxes out) living into your 70s $185,220

Under this scenario, our worker would actually lose out on $87,000 by waiting until age 70 claim — if his family tends to die earlier rather than later.

Of course, the truth is many of us will live longer than we might imagine. Let’s say you’re married. For married couples, there’s a 72% chance that one of you will make it to your 85, according to research.

Final Thought

The question of when to take Social Security is a highly personal one. But the bottom-line is that the longer you can wait, the better off you’ll be — unless you know you’re genetically cursed with the likelihood of premature death in your family.

For everyone else, you should at least try to hold out until your full retirement age if you want to collect your full Social Security benefit. Meanwhile, your monthly benefit will continue to grow until age 70 if you wait to claim, at which point it caps out.

And for those who are wondering, money expert Clark Howard plans to wait until 70 to collect his maximum Social Security benefit. You can read more about that here.

More Investing Stories on Clark.com

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