When Should You Claim Your Social Security Benefits? Ep #31 

Did you know that you can be eligible to collect social security benefits as young as 62? While the prospect may be exciting, the bigger question is: Should you? The answer is different for everyone and based on many factors. Are you married? What’s your health like? Do you plan on working in retirement? Do you have assets or other savings to draw from? In this episode of Retirement Made Easy, I walk through some common questions to help you determine when you should claim your social security benefits.

You will want to hear this episode if you are interested in…

• [2:35] When should you collect social security?
• [4:17] Have you reached your full retirement age?
• [5:24] Are you working right now?
• [7:58] Do you need the income to sustain your lifestyle?
• [9:14] Where else can you draw income from?
• [10:10] What is your spouse’s social security benefit?
• [11:23] What does your health look like?
• [12:07] What is your social security benefit?
• [14:19] Another important factor to consider

Social security and retirement age

You pay into social security your entire working life. It’s a 6.2% Payroll/FICA tax. Your employer also pays another 6.2% on your behalf. Medicare is another 1.45% that is included in the FICA tax. The benefit you get is based on your 35 best working years. If you’re still working, as long as your earnings fall into your top 35, your benefits should accrue.

You can claim your social security benefits as early as age 62 and as late as age 70. There is a full retirement age which is between 66 and 67. If you’re born after 1960, your full retirement age is 67. If you’re turning 62 in 2021, you are eligible to claim your benefits. But should you? Or should you wait and let it grow?

Are you working right now?

Social security limits the amount you can make while collecting your social security. If you’re 62 and you make $40,000 a year, I’d tell you to wait. Why? The earnings limit is $18,960 in 2021. If you’re under that, you can collect your benefit and it wouldn’t be reduced. If you’re over the limit, for every $2 you earn over the limit, your benefits will be reduced by $1. You’re better off waiting. What about your spouse? If they’re making $50,000, their income does not reduce your benefit. A pension, rental income, dividends, etc, don’t count.

Do you need the income to sustain your lifestyle? Do you have other sources of income to draw from? Do you have the means to delay social security? For many people, it’s not an option. Some people go into debt when they could turn their benefits on. It doesn’t make sense.

What is your spouse’s social security benefit?

If you’re married, some people like starting the lower benefit first and delaying the higher benefit. Why? Because of something called the survivor benefit. If the wife’s benefit is $1,000 a month and the husband’s is $2,000, the wife can collect the $2,000 if her husband passes away. Her $1,000 would drop off. By delaying the higher, you’re ensuring that your spouse is taken care of.

To decide this, you’ll need to know what your social security benefits are. You can go to SSA.gov and set up an account to find out what your benefits will be at 62 and 70.

Will your spouse continue to work? What does their benefit look like? Are you divorced? How long? What is your ex-spouse’s social security benefit? What does your health look like? Listen to hear how these things can impact your benefit.

Another important factor to consider: inheritances

What if you decide to retire but hold off on your social security benefits? Instead, you decide to take distributions from your 401k/IRA. The problem is that what you’ve accrued begins dropping. If your goal was to leave an inheritance—but you’re spending it down just to have a higher social security benefit—it doesn’t make sense. You’d be better off to start your social security benefit and continue to allow your assets to grow as long as possible.

Why? Because your social security benefits cannot be passed down to your adult children. If someone happens to you, your benefits stop. It’s for you and your spouse, so do what makes the most sense for your situation. To hear the full conversation and other factors to consider, listen to the whole episode of Retirement Made Easy!

Resources & People Mentioned

• What is your retirement age?
• What will your social security benefits be?