A Tool to Determine the Best Time to Take Social Security Benefits

by Gary Foreman

When to begin taking your Social Security benefits could be the most important retirement decision you make. Don’t leave your retirement money on the table with the wrong choice. Here’s a tool that can help you determine your ideal retirement age so you can maximize your benefits.

It’s a question many of the soon-to-be-retired ask. How do I determine the best age to retire? What about my spouse? Over the years, I have received several emails just like this one:

Gary,
My wife and I both turned 62 last year. We’re still working but thinking of retirement. Part of our decision will depend on when we can begin taking Social Security. I’ve been trying to research the different options, but it’s really confusing. And I understand that a change in the law makes it even more complicated. Can you help us decide when we should begin to collect Social Security benefits?
William

When to Take Social Security Benefits: One of the Most Important Decisions You’ll Make

William, you’re absolutely right. When to begin taking your Social Security benefits could be the most important retirement decision you make. A married couple with moderately high benefits could leave upwards of $150,000 on the table with a bad choice!

And, you’re also right that it’s complicated. If you go to the official Social Security page here’s what you’ll find:

You can start your Social Security retirement benefits as early as age 62, but the benefit amount you receive will be less than your full retirement benefit amount. If you start your benefits early, they will be reduced based on the number of months you receive benefits before you reach your full retirement age. If your:

  • full retirement age is 66, the reduction of your benefits at age 62 is 25 percent; at age 63, it is about 20 percent; at age 64, it is about 13.3 percent; and at age 65, it is about 6.7 percent.
  • full retirement age is older than 66 (that is, you were born after 1954), you can still start your retirement benefits at 62 but the reduction in your benefit amount will be greater, up to a maximum of 30 percent at age 62 for people born in 1960 and later.

If you work after you start receiving benefits, we may withhold some of your benefits if you have excess earnings. However,

  • we have a special rule that applies to earnings for one year. The special rule means we cannot withhold benefits for any whole month we consider you retired, regardless of your yearly earnings.
  • after you reach full retirement age, we will recalculate your benefit amount to give you credit for any months in which you did not receive some benefit because of your earnings.

Caution: If you apply for benefits more than 6 months after you reach full retirement age, we can only pay the benefits for the previous 6 months.
Source: https://www.ssa.gov/planners/retire/applying2.html

That’s enough to make your head spin! As a general rule, you can say that waiting until you reach full benefits age will maximize your monthly check.

Waiting Until You Reach Full Benefits Age Might Not Be the Best Answer

According to the Social Security Administration the average monthly benefit in 2015 was $1,335. Source: https://www.ssa.gov/news/press/basicfact.html

But waiting might not always be the best answer. Especially for married couples or people who are divorced. Then the earnings history of both people and their ages makes a difference as to when it’s best to begin collecting Social Security.

Changes in the law also complicates matters. Strategies like “file-and-suspend” and the “restricted-application strategy” were outlawed during 2016 for people of a specific age.

Don’t Count On the Social Security Office to Give You Advice

You’d think that you could call Social Security and get advice, but their personnel aren’t trained and in fact are instructed not to give you advice.

So much as I’d like to give you a specific answer, a lot depends on your unique situation and a ‘one size fits all’ answer could cost you thousands of dollars. So you’ll have to forgive me for passing the buck to professionals. I’d advise you to get professional advice (either from a CPA or Certified Financial Planner® trained in the topic) or use online software to help you find the best time to begin collecting SS.

A Tool for Those Who Don’t Have a Financial Adviser with Expertise in Social Security Benefits

If you don’t have an adviser with expertise in Social Security benefits I’d recommend using the online service of Social Security Choices. We’ve compared various programs and found their’s to be the best.

We’ve also negotiated a special rate special rate of $29.95 (a 25% discount) for Dollar Stretcher readers.

To get a customized report you’ll be asked to provide a little non-confidential information:

  • an email address to deliver your report.
  • years of birth for both you and your spouse or ex-spouse (if appropriate).
  • an estimate of Social Security retirement benefits for you and your spouse or ex-spouse (if appropriate). You can get this information online from Social Security in a matter of minutes.

Once you have filled in all of your necessary information on SocialSecurityChoices.com, you will receive a 14 page report explaining the various options and your choices. You can see a sample analysis here.

It’s time to order your report!

They have specific paths for:

Don’t forget you get a 25% discount as a Dollar Stretcher reader. At the end of the ordering process you will be asked for a coupon code. Type “retirement” in the box for ‘Coupon Code’ to receive your 25% discount.

 You’ll be taken through a questionnaire. And, yes, it does take a few minutes. But that’s time well spent on a decision that could make you thousands of dollars.

Reviewed March 2019

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You've learned to work smarter, not harder.

Subscribe to After 50 Finances, our weekly newsletter dedicated to people just like you featuring financial topics and other issues important to the 50+ crowd.

Debt ChecklistSubscribers get The After 50 Finances Pre-Retirement Checklist for FREE!

Your Email:

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