When Should I Take My Social Security Retirement Benefits?

As you approach retirement, you must decide when to begin taking your Social Security benefits.

You have three options:

1. Take benefits between age 62 and your full retirement age,
    
2. Wait until your full retirement age, or
    
3. Delay taking benefits until you reach age 70.

Nearly three-quarters of people say they plan to take their benefits early. Some of them don’t have much of a choice in the matter; they need access to this money as soon as possible. But for others, it might make more sense to delay benefits, even past their full retirement age.

How Do I Decide?

Ultimately, this is a personal decision. It can depend on several different factors.

Those born before 1937 had a full retirement age of 65. For those born after 1937, the retirement age gradually increases until it reaches age 67 for people born in 1960 or later. If you take Social Security between age 62 and your full retirement age, your benefits will be lower to account for the longer period you’ll be receiving payments.

If you delay taking retirement, your benefit will increase by 6 percent to 8 percent (depending on when you were born) for every year that you delay, in addition to any cost-of-living increases.

For example, suppose you were born in 1944 and could file for full Social Security retirement benefits at age 66. Instead, you delay taking benefits until age 70. Your annual percentage increase in benefits will be 8 percent.

By delaying your benefits by four years, your Social Security check will be 32 percent higher (4 years x 8 percent per year). If your monthly benefit would have been $1,000 had you taken it at age 66, the monthly benefit you'll receive at age 70 will be $1,320 (not counting cost-of-living increases, which are around 4 percent a year).

If you are lucky enough to have the choice of when to take your benefits, consider the following:

• Whether you plan to keep working – If you plan to work until your full retirement age or beyond, it probably won’t make sense to take benefits early, especially if you earn considerable income.
  
  Not only will you be receiving reduced Social Security benefits, but you’ll pay tax on your income, too, and the extra income may mean that more of your Social Security benefits will be taxed. Learn more on how work affects Social Security.

• Health and life expectancy – To take full advantage of delaying benefits until age 70, you’ll need to live past age 80 (not taking into account cost-of-living increases). The average life expectancy for men who reach 62 years of age is around 80; for women, it’s around 83. If you’re healthy and have a long life expectancy, you may receive more benefits if you delay.
   
• Spouse’s needs – Another important consideration is your spouse’s needs. An older spouse (and especially if they’re the only breadwinner) might want to delay benefits as long as possible so as to increase the surviving spouse’s survivor benefits and provide additional protection to the surviving spouse.
  
  Note: Even if you delay taking your benefits past your full retirement age, your spouse can still take their spousal benefits anytime after age 62. (While you are still alive, your spouse is entitled to one-half of your full benefit if the payouts would be greater than what they’d receive from their own earnings.)

• Other retirement plans – Experts disagree on whether it makes sense to take benefits early and defer using other retirement plans. Some claim that if you’ll get a higher rate of return on a tax-deferred retirement plan than you would get by waiting to take Social Security, you should take Social Security early.

On the other hand, others argue that letting a retirement account build up could create greater tax obligations. If your retirement account and Social Security combine to put you above the income thresholds, you’ll have to pay taxes on the Social Security. Delaying Social Security may reduce the taxes by providing you with more Social Security income (which is at most 85 percent taxable) and less retirement-account income (which can be 100 percent taxable).

See more information on Social Security.