Millions of Americans rely on their Social Security benefits for their after-job years – almost 67 million per month last year alone. As you approach the golden years of your life, it’s essential to begin planning when to start claiming your Social Security benefits.

  • Do you claim it the moment you retire?
  • Or, do you wait around for a few years to get a bigger payout?

This is an important decision to make since it affects how much money you will receive.

Waiting longer will certainly result in a larger monthly benefit; but, can you afford to delay given your current financial condition and future needs?

At Brogan Financial, our goal is to arm you with the right financial knowledge to help you make an informed decision.

In this article, we’ll give you the ins and outs of your Social Security earnings so you can decide the best time to draw your benefits. 

When Can I Start Collecting Social Security Benefits?

The minimum eligible age for claiming Social Security benefits is 62. So, you can start collecting your benefits right when you turn 62. However, claiming your social security benefits at that age will result in reduced monthly payouts.

When the Social Security Act was first signed in 1935, 65 was considered the Full Retirement Age (FRA). It was previously adjusted upward to age 66, and now it has been raised to age 67 for those born after 1959. So, you won’t receive 100% of your Social Security FRA benefit if you claim it before turning 67.

In addition to a reduction in benefit, drawing prior to your FRA subjects your benefit to an earnings test. Consequently, if you’re earning a full-time income, you will more than likely have to give social security benefits back due to the earned income test. As a result, many workers in their 60s decide to wait until they’re retired or reach FRA.

This Social Security calculator can help you calculate how much you’ll get if you claim your benefits early. But if you don’t want to do the math, here are some quick examples that will help you understand the basics. 

If you choose to claim at 62, you will be entitled to receive between 70-75% of your FRA benefit, depending upon the year of your birth. In addition, if you delay after your FRA, you will see increases in your SS benefit.  You receive delayed retirement credits and can delay until age 70, after which there is no economic benefit to delay.  If we look at the difference in drawing at age 62 versus age 70, the increase in income is pretty dramatic, as you will see over a 75% increase if you delay your benefit from 62 all the way until age 70.  

When Should You Claim Your Social Security Benefits? Key Considerations.

When should you claim your Social Security benefits? Take a look at these factors to make the right call: 

1.    Breakeven Point

Waiting till your 70th birthday appears to be the most lucrative decision financially, but it’s not that straightforward. A person who claims benefits at 70 receives a larger check, but they will also miss out on eight years of payments after becoming eligible for benefits.

Calculating the breakeven point will help you make a rational decision. The breakeven point is the age at which waiting until Full Retirement Age or age 70 results in a higher total amount of Social Security money compared to claiming benefits earlier.

Determining the correct Social Security breaking point could be difficult. You will have to think about factors like cost of living adjustments, divorce settlements, etc. An experienced wealth manager can help you calculate the breakeven point precisely and allow you to make a more informed decision. 

2.    Health

Your health may also influence your decision. If you don’t have any critical health issues and expect a longer life expectancy, delaying your claim on your Social Security benefits could be a great call. You will be giving up earlier payments when you claim the benefits late, but it can yield a higher monetary return in the long run.

On the other hand, you might consider claiming your Social Security benefits early if you have a serious health condition or have a history of shorter life expectancy in the family. 

In addition, it’s important to understand how spousal benefits and widow/widower benefits work, because the surviving spouse will receive the higher of the two benefits when one spouse dies.

3.    Current Financial Condition 

You need to evaluate your finances before deciding when to claim Social Security benefits. If you already have other sources of income, you can afford to delay withdrawals. Inflation, cost of living adjustments, and the potential impact of Social Security benefits on your taxes should also be considered.  

4.    Consult a Financial Expert

Deciding when to claim your Social Security benefits may seem straightforward at first glance. However, as you delve into the complexities of early versus delayed payouts, the situation can quickly become overwhelming. 

Since there’s no one-size-fits-all solution, consulting with a knowledgeable financial advisor is essential. By carefully assessing your individual circumstances, they can guide you toward the optimal timing for claiming Social Security benefits.

Work with Us

At Brogan Financial, we have a team of seasoned financial specialists who can assist you in choosing the right time to claim your Social Security benefits. We will analyze your situation and tell you exactly when you should file the claim to maximize your Social Security payout. 

Book a call today so that we can help you find the best Social Security strategy. 

Also, don’t forget to tune into “More Living with Jim Brogan” at 98.7 FM WOKI every Saturday morning at 9 a.m. for more financial insights and discussions!