When should I begin taking Social Security?

The first three installments of this series covered the basics of retirement benefits, who is entitled to receive payments, and factors that lead to a reduction (or increase) in benefits. This leads us to the age-old (or old-age rather) question, when is the best time for me to apply for Social Security benefits?

Delaying retirement until age 70 may seem like the smartest decision because you receive 132% each month of the FRA benefit, but keep in mind that you are missing out on four years of payments (66 being the FRA). The idea of not receiving payments at all is what spurs most workers to file for SS at the earliest age possible even if the benefit is 75% of the FRA benefit. Based on actuarial studies, if you do not think you will live past the age of 79 or you have health problems, it is usually best to apply for benefits at 62.

As mentioned in the second installment, the age that the worker files will affect the amount of the spousal benefit. If the worker applies for benefits early, the spousal benefit is also reduced to 75%. If the spouse applies at 62, the benefits are reduced further – the system comprehends two early retirements. The delaying of SS payments works the same way, but benefits are increased.

In order to maximize the household SS benefit, the current age and the earnings of each spouse during their work history needs to be considered. For instance, a couple is the same age and worker was a high earning individual and the spouse did not work. It is more beneficial for the worker to delay taking SS and for the spouse to take as early as possible. The second installment mentioned that the spouse could not apply for benefits until the worker was at FRA or had already applied. Therefore, the non-working spouse should file at his or her FRA (or when the worker applies- whichever comes sooner) and the worker should delay until age 70.

Let’s consider the scenario that both spouses worked and earned SS credits. The lower-earning spouse should apply for early benefits at 62 and the higher-earning spouse should defer until age 70. The reason this plan generates the most household benefit is because the lower-earning spouse can apply based on their own benefits at age 62. Then, upon the FRA of the higher-earning spouse, the lower-earning spouse will receive the higher of the two benefits – their own worker benefit or the spousal benefit from the high-earning spouse.

The decision of when to take SS benefits depends on several, albeit confusing, factors, but I hope this blog has laid out suggestions for basic situations. The most important items to keep in mind when making this decision are: consider the affect on your spouse’s benefits, how long you plan on working, and how long you expect to live.