Start early or delay until age 70?

This is such a confusing question for many people, with good reason.  There are advantages and disadvantages to taking benefits early, and also for waiting until you are 70.  Some things, however, are pretty straight-forward and having these facts firmly in mind while making your decision may help in choosing when to start receiving Social Security retirement benefits.

The Basics:

Your Social Security[2] benefit is based on the 35 years for which you had the highest earnings.  For most people this is the last 35 years you worked.  If you have had income for less than 35 years, the non-earning years are zeros. 

You must have worked at least 10 quarters (2 ½ years) to be eligible for any amount of SS.

You can calculate your expected benefits online:[1]

Now the tricky part 

You can start collecting SS benefits the year you turn 62.  The problem with doing this is that 62 is considered “early retirement” and your benefits are reduced by about 25% from what you would receive if you waited until “full retirement age” (FRA).  FRA is somewhere between 66 and 67 depending on the year you were born.

If you wait until you are 70 you get a sort of bonus; your benefits are about 32% higher than what you would get at FRA.

These numbers don't jump up at FRA and 70, instead they are increased incrementally each year, so the benefit you get at 63 is slightly higher than what you would get if you started taking benefits at 62.

The next thing to keep in mind is that your benefits increase based on a cost of living adjustment (COLA), but other than that they remain at the amount at which you started. 

Some numbers from

If your benefit at FRA is $1000, and you start taking them at:

  • 62 you get $750 every month until you die (plus COLA)
  • FRA you get $1000 every month until you die (plus COLA)
  • 70 you get $1320 every month until you die (plus COLA)

Got all that?  Now you need to start doing some math to decide what to do.  Easy math because I’m going to get rid of the hard stuff for you right now.


In terms of how much total money you get from SS, it really doesn’t matter when you start, assuming you’ve worked 35 years by the time you reach age 62.  Got that?  Don’t make your choice based on total money because it’s designed to work out about the same based on average life expectancy.  If you have reason to believe you’ll live longer than average, or less than average, you might make your decision based on longevity expectations. If you are going with average life expectancy you’ll want to think about things differently.

moneyCredit: flickr


Reasons to wait

  1.  Do you plan to use SS as the greatest portion of your living expense when you are older?  If yes, then wait to take it.  You want the most money possible.
  2. Do you have a spouse that might outlive you, and you have the higher benefit between the two of you?  If yes, then wait to take it.  You want your spouse to have the most money possible.
  3. Do you plan to continue working after age 62?  If yes, then wait to take it (probably).  Your SS earnings can be taxed[3] if you make more than a certain amount of money.
  4. Do you fear running out of money when you’re older regardless of your current circumstances?  If yes, then wait to take it.  As I said, the absolute dollars aren’t that different so you can make your decision based on piece of mind.

Reasons to start early

  1.  Do you need the money now?  If yes, then take it.  You might want to consider trying to work a little longer and increase your benefit if you can, just so you have a bit more to live on but that isn’t always possible.
  2. Do you have minor children?  If yes, you probably want to take it so your children get benefits as well.  Check on the numbers to see if it makes sense for your personal situation.
  3. Do you have accounts that are earning a lot of interest?  Probably take it.  If the interest from your accounts outstrips the “interest” you get from delaying SS, then why not use SS for living expenses and let your other money continue to work for you?

A couple other things to consider

If you are married and your spouse also worked and is eligible for SS, you are eligible for ½ of your spouse’s benefit when you reach FRA.  There are a few details that I’ve left out, but if this avenue is open to you check the SS website[2] to find those details.

If you are divorced, were married for more than 10 years, and have not remarried, you are eligible for half of your ex-spouses SS benefit assuming he or she is eligible.  This doesn’t affect your ex’s benefits in any way.

If you will be receiving a pension from your place of business your SS benefits may be reduced. Actually, if your company had a pension plan they may not have paid into SS anyway and you may not be eligible.  Check on that before making any assumptions about what you’ll receive.

If your Required Minimum Distributions (RMDs) when you turn 70 will be very high, you might end up paying taxes on SS income.  Keep this in mind when deciding what level you want your SS payments to be.  Consider the value of Roth IRAs if you might be in this position.

Online access to your SS information

The Social Security office has a website that allows you to create an account and have access to your SS information from your computer.  I tried to sign up and didn’t make it past the first page.  When I called for assistance the very helpful person on the phone told me that signing up online is actually very difficult.  In an effort to make sure that you are who you say you are, they want all kinds of details, such as the phone number you had when you last updated your information.  In my case that was three or four phone numbers ago and I have no idea.  They can’t help you over the phone either.  I was advised to go to my local office and they will help me get set up.  Having access to my own information just seems like a good idea to me, so I’ll do this very soon.

I hope this makes sense.  There is so much confusing information and advice out there and I wanted to simplify things as much as possible.  Sorry if I just made it worse; it is very confusing.