Should I claim my Social Security benefits now? It’s a common
question, and it’s one that you’re very prudent in asking. Timing is the
biggest facet in maximizing your benefits. Yet, you’ll get an array of
answers on the best timing. Let’s break down three questions that will
give you the most definitive answer to your question.
Social Security: Timing Is A Crucial Decision
Approaching Social Security age can be one of the most confusing times
in life. While there’s a plethora of information to warn you of the
potential pitfalls and mistakes, much of this info that’s supposedly
designed to ‘help’ you actually leaves you with even more questions and
Of course, no one wants to leave any portion of their benefits on the
table due to a simple timing mistake in starting Social Security too early.
So, the most crucial point is to understand how Social Security benefits
are calculated. Timing greatly impacts the amount of your checks, and it
also affects anyone claiming benefits off your work history.
Ask Yourself Three Questions To Get The Timing Right
Knowing the answers to the following three questions will help you time
your Social Security most advantageously:
1. How Does Age Influence Benefits?
While you can begin drawing Social Security benefits as early as 62-
years-old, it may not be the best age to do so. Why? You’re penalized for
starting your benefits this early. The check amount reduction is
Only those who wait until they reach full retirement age, or FRA, can
claim the full amount they are due, which is called a standard benefit.
What is your FRA? Anyone born between 1943-1954 will reach FRA at
66-years-old. Those born in 1950 or later must add two months per year
thereafter until the cap of age 67.
If you decide to collect at age 62, then you’ll only draw about 70-75% of
your standard benefit. That’s a big chunk of your fixed income during
retirement to forfeit.
On the other hand, you’re rewarded for each month of delay if you put
off claiming your benefits once you reach FRA. This continues until you
reach the maximum benefit age of 70. For FRAs of 67, that’s about 24%
over what you would’ve received at age 67. For FRAs of 66, that’s about
32% over what you would’ve received at age 66.
Should you delay? This is a highly individualized question. In most
cases, delaying offers more money in the long-term. However, that’s all
based on your life expectancy. If you’re in relatively good health, then it
may pay off to delay. Meanwhile, if your health is poor, then it may be
wiser to collect at FRA or even earlier.
2.What Other Applicable Factors Affect My Benefit Amount?
Aside from age, you’ll want to consider three other main points:
• What’s the sum of your lifetime income?
You’ll want to ensure that you’ve at least worked 35 years, which is the
length of work history Social Security uses to determine your benefit
amount. Otherwise, you’ll have an automatic zero-income applied to
your benefit amount, and that will drastically reduce even the highest
Of course, if you have some years of lower pay, such as before you
gained a college degree or during job transitions, then you’ll want to try
to roll those years off. Only the top 35 years are counted. So, working a
couple extra years in a higher earning job to get the lesser earning years
off the scale may certainly be worth the effort.
• Do you owe taxes on your benefits?
Taxes directly affect how much of your benefits you keep. Many with
significant retirement income from other sources may not be able to
avoid paying benefit taxes, but delaying your claim until your income is
at its lowest is the most tax-friendly Social Security move. Why?
You’ll pay taxes on up to 50% of your benefits if your combined income
of adjusted gross income, nontaxable interest , and 50% of your benefits
total to exceed $25,000 for singles or $32,00 for couples. If that total
exceeds $34,000 for singles or $44,000 for couples, then you could face
up to 85% of your benefits being taxed.
• Are you working and claiming FRA benefits?
Keep in mind that working and claiming Social Security benefits before
FRA can drastically reduce your benefits. In 2020, this amounts to -$1
for every $2 earned past $18,240 for those not FRA. That amount is -$1
for every $3 over $48,600 for those reaching FRA in 2020 (prior to your
However, there is an upside. This isn’t a permanent reduction. Your
benefits will be recalculated once you get to FRA. Monies withheld are
included so that your benefit amount goes up. It’s just easier and less
confusing if you avoid the above by waiting to claim your benefits until
you reach FRA or fully retire.
3.How Will My Spouse Be Impacted By My Social Security Choices?
If your 35 years of income is greater than that of your spouse, then
you’ll want to pay close attention to when you claim your benefits. In
such cases, the lower-earner spouse is entitled to receive up to half of
your FRA benefit. Collecting prior to FRA lowers both your benefit
draw and that of your spouse collecting based on your income.
If an early draw is needed, then the most common strategy here is for the
lowest earning spouse to collect first. This enables that lower earning
spouse to still automatically begin collecting a higher spousal benefit
when their spouse collects at FRA.
As you can see, when it comes to Social Security benefits, all roads lead
back to timing. Answering the above three questions should give you a
very clear picture on your unique ideal timing.
Does your plan meet all your retirement needs? Schedule an appointment now with one of our advisors for a complimentary review of your retirement plan.
Doug Ybema- Grand Rapids Office
Randy Knapp- Okemos Office