Question:  

I’m thinking about claiming social security benefits. What questions should I consider when making this decision?

Answer: 

As you prepare to claim benefits, timing and strategy will help you maximize the outcome. This year, about sixty-seven million Americans will receive over one trillion dollars in Social Security benefits. If you’re planning to join that total and claim your benefits, start with the when and how questions and include your marital status, your health, and even whether you have dependents as these can all affect what benefits you receive.

To get the most out of your hard-earned benefits, focus on developing the right plan for you and your family. Doing so could help you enjoy a comfortable retirement.

Conventional advice: Don’t claim Social Security at age 62

When it comes to a decision as important as claiming social security, it’s important to explore all options. Claiming Social Security early translates to a 30% smaller check if you claim at age 62 but your full retirement age is 67 (when you’re able to collect 100%). However, for a select few, claiming early may be worth it.

An example is someone who is wealthy and plans to retire at 62 and live off large withdrawals from pre-tax retirement accounts. This will push them into a higher tax bracket than the alternative – taking Social Security payments at 62 to reduce the amount withdrawn from those accounts. Claiming early also gives retirement assets room to continue compounding. Plus, your tax bill could be smaller due to the tax treatment of Social Security income. Finally, the extra income can enhance what financial planners call the “go-go” years, a period at the beginning of retirement when we can expect to have the most time and energy.

On the other hand, delaying Social Security can function as longevity insurance if outliving your money is a big concern. Those who decide to defer their Social Security benefit earn delayed retirement credits, starting the month they reach full retirement age, or FRA (currently sixty-six and rising to sixty-seven for people born in 1960 or later). For every month you delay filing between your FRA and age 70, Social Security increases your eventual benefit by two-thirds of 1% – a total of 8% each year you wait.

Where do I start?

Given the complexities involved in claiming benefits, creating a plan of action for Social Security can seem overwhelming. Fortunately, you don’t have to go it alone. Your financial advisor can help you develop an appropriate retirement income strategy based on your individual circumstances but there are a few key questions you can ask yourself beforehand to jumpstart the conversation.

Five key considerations

Before making any decisions, it’s important to consider the elements of your life that could influence your individualized Social Security strategy. To prepare for your meeting with your advisor, start thinking through these key questions:

When are you planning to retire? Is this date fixed, or is it more flexible?

What will your earnings look like if you continue to work past the age of sixty-two? Would these come from continuing in your current role, or are you considering taking on new or part-time work down the road?

What other sources of income will you have in retirement? In addition to your Social Security benefits, will you be receiving any pension payments, employment income (part-time work) or annuity payouts? What about any business sale proceeds, insurance policies or inheritances? And of course, consider any retirement accounts or additional savings you've built up over the years.

How long do you expect to live? Consider your current health as well as your family history.

What does your family situation look like? Are you single, married or divorced? Do you have any dependents?

There’s no single optimal time to claim benefits that fits everyone. Social Security decisions should take into account many factors, including spousal and survivor benefits, so make sure to talk to your financial and tax advisors to find the strategy that best fits your situation. 

As you think through these questions and begin shaping a strategy with your advisor, consider creating a free “My Social Security” account at SSA.gov. Within your account, you can review a statement detailing your estimated benefits as well as explore other resources for developing a sound plan. Stay focused and plan accordingly.