When to Start Taking Social Security

The Social Security Administration allows people born after 1960 to begin drawing Social Security benefits at age 62. However, drawing at this “early” age will result in up to a 70% decrease in monthly benefits. “Full” retirement age is usually 67. You may further increase your monthly payments if you take a “delayed” retirement at age 70.

While many people delay their Social Security income as long as possible to increase monthly payments, there may be better choices for some individuals or families. We will break down the factors you should consider when making the life-impacting decision of when to take your first Social Security Income check.

Your Employment Status

One of the most significant factors in determining when to take Social Security is your plans to stop working and when. If you are employed and making more than roughly $20,000, or if you plan to be self-employed and making more than this amount, drawing Social Security checks before full retirement age may be the wrong choice for you. However, if you wait until full retirement age to take your benefits, you can receive your full monthly amount without any penalties, in addition to your full pay.

If you take your SSI payments early, the Social Security calculation reduces your monthly payment by one dollar for every two dollars you earn over $19,560 per year. Unless you need the money urgently, taking this cut in your SSI income may not be worth it. This leads us to our next point:

Your Financial Need

If you become unemployed with insufficient income, it may be worthwhile for you to draw your Social Security benefits early. For Federal Employees, this calculation should include your income from TSP, Annuity payments, and other forms of income. A solid and well-thought-out budget is essential for making this decision, along with projections of your monthly income from TSP and your Government annuity.

Your Life Expectancy

The Social Security Administration estimates that a person aged 65 should expect to live, on average, to age 84 for men and age 87 for women. Your unique life expectancy can be estimated based on your general health and family history. If you are in poor health, or if your spouse earns much more than you do and is in poor health, consider drawing your Social Security benefits early to maximize your overall income from this source.

Your Marital Status

If you are married, the status of your spouse’s income and health color the other factors impacting the decision of when to begin drawing on SSI benefits. If you are married to someone who makes significantly more income than you do, you may qualify to receive 50% of their SSI Benefits rather than your own. Choosing this option would not reduce the amount your higher-earning spouse would be able to draw. If you are widowed, you may qualify for 100% of your higher-earning spouse’s SSI benefits. These benefits may also be available to divorced spouses of higher wage-earners who were married for ten years or more. If you choose to exercise this option, you former spouse would not have to be informed of your choice.

If you have a spouse who has earned more than you throughout their lives and who is comfortable delaying their social security benefits, the balanced approach of you choosing to draw early may be the best solution for your household income. This is particularly true if you are in poor health and not drawing more than $20,000 per year yourself.

Pulling It All Together

Deciding when to begin drawing Social Security is a complex and highly impactful decision that should be influenced by a clear understanding of the health, income, and expenses of your entire household in retirement.

If any of this is daunting for you or leaves you with questions, you can feel free to contact us to set up a time to speak with a knowledgeable retirement consultant. Together you can develop a clear picture of your whole household income and benefits in retirement. At Federal Retirement Experts, we offer this service free of charge to Federal Employees ages 55+.

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