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When to File For Social Security Benefits

Four different machine filesImage via Wikipedia

All future Social Security recipients face this question at some point:  When should I file for benefits?

As you are likely aware, age 62 is the earliest that you can file for benefits.  By filing at this age, you will begin receiving your benefit at a reduced amount – perhaps as much as 30% reduced.

Waiting to file until your Full Retirement Age (FRA) will allow you to receive the full benefit amount, without reductions.  You could also wait until age 70 to file for benefits, which would result in an overall increase to your monthly benefit amount, by as much as 32% in some cases.  Granted, you will have foregone several years’ worth of payments if you wait to file at some age later than 62, but on average, it all works out about the same (with a few exceptions).

The way that these reductions and increases are designed is to ensure that, on average, all Social Security recipients, regardless of the age that they begin receiving benefits, ultimately receive roughly the same amount of benefits during their lifetimes.  This is all calculated by actuaries, and it involves the population’s average lifespan.

So if you start receiving your benefit earlier, even though it’s reduced you’re receiving it for a longer period of time than waiting until later.  On the other hand, if you delay filing until FRA or age 70, your benefit is greater each month, but you’ll be receiving it for a shorter period of time.  Eventually these strategies “cross over” – that is, one method begins to work more in your favor than another – at around age 82.

What I mean by that is that, filing earlier at the reduced rate will pay you more in overall benefits up to age 82, at which point the later filing ages will begin paying you more over your lifetime.  If you take into account the annual cost-of-living adjustments (COLAs), the break-even point is actually quite a bit lower, possibly as early as age 76.  This is due to the fact that the COLA is a percentage applied to your monthly benefit – and if your monthly benefit is reduced by filing early, your COLA adjustments will be smaller as well, and vice versa when you file later.

So if you plan to live past age 76, it most likely is in your best interest to wait until the latest point to file for your benefit.  And if you need more reasons to consider delayed application, read on.

Survivor Benefits

One additional reason that you might want to delay applying for your benefit is if you have family members that will depend upon your benefit upon your passing.  This is due to the fact that your survivors’ benefits are based upon the actual benefit that you were receiving at your death.  So, if you delayed filing for benefits and therefore received a higher benefit amount, your surviving spouse (and other family members, if eligible) will receive a higher benefit amount for the remainder of his or her life, assuming that the Survivor Benefit is greater.

This gives you another reason that delaying benefits could be the better option.  Otherwise, if your benefit is the same as or smaller than your spouse’s benefit, or if you don’t have a spouse, then it’s up to you: if you think you’ll outlive the average, it’s better to wait.  If you don’t think you’ll live that long, then start as early as you like.

* The above review doesn’t take into account a situation where you may still be working while receiving Social Security retirement benefits.  I’ll cover that in another article.

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  1. Great post on a very slippery subject. The other point here is that with those taxpayers will retirement plans and IRAs there is an interplay at work here. Sometimes it makes sense to increase IRA or retirement plan payouts and delay the beginning of social security payouts. This could help smooth out the effective tax brackets over time while deferring the social security payouts to a later year and with the kicker of a higher payout. Of course the numbers need to be crunched, but there can be some pretty neat results here.

    1. jblankenship says:

      Excellent point, Steven – thanks for sharing. In the early years (before 70 1/2) there is leeway to work with in planning income, which many folks don’t take advantage of. As you say, a bit of planning can smooth out the tax hits and allow for greater benefits later.


  2. Anne says:

    Social Security appears to be a fascinating facet of our Government; a facet we citizens can take Hope in…and social security is interesting to understand too !
    ps will be buying your book in the very new furture; thanks ! Anne in Conn. : )

    1. jblankenship says:

      Thanks, Anne!

  3. DIY Investor says:

    Excellent post! As an advisor I often have to direct a bunch of questions at clients to get at an appropriate decision. Many times everything goes out the window and people take SS early because they hate the thought they might die and the government “win”.
    I wondered if there is a decision tree like set-up to guide people in making the right (for them) decision that simplifies the analysis and even spouts out the break even.

    1. jblankenship says:

      Robert, I have started work on such a decision tree in the past but it gets pretty complicated quickly. I may give it another go sometime soon, as I agree such a tool would be helpful to lots of folks.


  4. Dana Anspach says:

    Hi Jim, I think an important distinction to make is how you look at claiming for singles vs. marrieds. For singles the traditional breakeven analysis is a decent way of evaluating the decision. For marrieds, as you suggest above, survivor benefits, and often the ability to use spousal benefits, can have a big impact. Married couples, as you know, can often get substantially more in benefits by coordinating between them how and when they claim. P.S. I am reading your Social Security Owner’s manual right now and plan to post a book review on my MoneyOver55 site soon. In your book your example about cumulative taxes paid based on when you claim Social Security and how much you withdraw from your IRAs is great. I have similar case studies in graph format on my website.

    1. jblankenship says:

      Excellent points, Dana, and good fodder for future articles. I have written quite extensively on Spousal and Survivor benefits – and more examples are always helpful and always seem to garner a lot of attention and commentary.

      Thanks for your kind words re: my book – and I’ll have to get over to your site and see your work.

      Thanks again – jb

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