When to Start Social Security?

Most people have the option to begin taking Social Security at the age of 62. Spouses can also elect to start taking benefits on their spouse's Social Security as early as age 62.

But that doesn't mean taking Social Security as soon as you're eligible is a good idea. If you don't need the income to live on, it may make sense to wait – especially if you are in reasonably good health.

That's because the longer you wait to begin taking Social Security benefits, the higher the monthly benefit you will receive, up until age 70. If you can wait that long, your monthly Social Security amount will be 132% higher

Conversely, if you elect to take your benefits early, you will receive a reduced amount for each month you take benefits early.

For every year you can delay taking Social Security benefits, your monthly benefit check when you do begin receiving benefits will increase by 8 percent. So if you have other income to meet your living expenses, waiting until full retirement age to take your benefits can make a substantial difference in your income later in life.

However, your monthly benefit doesn't go up after you turn age 70. There is no reason to continue to delay taking benefits after that point.

Who Should Take Benefits Early?

Consider taking Social Security benefits early if:

• You need the income to make basic living expenses.
• You are in poor health and don't expect to live to normal life expectancy.
• You are the lower-paid half of a couple. In that case, it may not pay to wait past full retirement age before collecting benefits.
• You want your spouse or qualifying child to begin receiving their benefits, which would equal one-half of your own retirement benefit. (If you're the primary income earner, this will not decrease your benefit).

Your expected longevity is a major consideration in deciding when to begin taking Social Security benefits. Since the Social Security program began, the life expectancy for men turning 65 has increased by over six years to age 84. The life expectancy for women turning 65 has increased by more than seven years to age 86.5, according to the Social Security Administration.

Longevity is partly hereditary. If your parents and grandparents lived very long lives, you may want to delay taking Social Security. Likewise, if your lifestyle has been very healthy for years, you may also be better off delaying benefits.

If potentially lethal health problems run in your family, or if you are already experiencing them yourself, or if you smoke, or otherwise believe you may not make it to your mid-80s, you might be better off taking Social Security as soon as you’re eligible.

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Full Retirement Age

Your full retirement age is when you are eligible to receive your full Social Security benefits. Your full retirement age depends on your year of birth. If you were born in 1950 or earlier, you've already hit your full retirement age. If you were born in 1960 or later, your full retirement age is 67. You can find your own specific Social Security retirement age here.

But taking benefits as soon as you reach full retirement age doesn't maximize your monthly Social Security benefits. If you continue to delay taking benefits after reaching full retirement age, you will receive delayed retirement credits. Your eventual monthly payout will continue to increase by approximately 8% per year for each year you wait even after your full retirement age until you reach age 70.

Mathematically, that's a very attractive rate of return – especially in a low-interest-rate environment. It would be very tough to take income early and invest it and still get 8 percent without taking a significant amount of risk. Which is something we want to avoid as we head into our retirement years.

Are You Still Working?

If you are still working, part of your Social Security income is offset by your income from work. Before you reach full retirement age, the Social Security Administration will lower your benefit by $1 for every $2 you earn above an annual income threshold ($18,960 as of 2021).

But once you reach your full retirement age, the withholding drops to $1 for every $3 you earn from working.

So if you're still in the workforce, you may not receive as much of a Social Security benefit as you expected – especially if you haven't reached full retirement age yet.

To determine this income offset, Social Security Administration only counts income from working. They don't count pensions, annuities, investment income, interest, veterans’ benefits, or other government or military retirement benefits toward the threshold.

Note: The withholding is temporary. In theory, you will get the money back in the form of a recalculated higher monthly benefit once you reach full retirement age. However, there is a risk that you won't live long enough to reach the break-even point. To learn more about the taxation of Social Security benefits, see IRS Publication 915.

For more information on how working affects your Social Security benefits, click here.

Who Should Wait Until Full Retirement Age to Take Social Security Benefits?

Most people who do not fall into the two categories above should wait as long as they can, up to full retirement age, to begin taking Social Security benefits.

You should also consider waiting if you are married and the higher wage earner. This is because your benefits will determine your spouse's spousal and survivor benefits. You want your monthly benefit to be as high as possible, because the higher they are when you pass away, the greater the benefit your surviving spouse will receive for the rest of his or her life.

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The Social Security Tax Trap

Depending on your income, up to 85 percent of your Social Security benefits could be taxable.

You may be able to reduce the Social Security tax trap by delaying taking Social Security as long as possible, up until age 70.

Meanwhile, consider drawing on taxable sources of income first, such as traditional IRAs, 401(k)s, and 403(b)s early in retirement. Once you start taking Social Security benefits, transition to non-taxable sources of income, such as Roth IRAs, municipal bonds, capital gains, or loans against a permanent life insurance policy. Those sources of income don't count against your threshold for calculating tax on Social Security benefits.

Take your Social Security benefits too early, while you still have significant income from taxable sources like work, traditional IRAs, and 401(k)s, and taxes could tear a chunk out of your Social Security income.

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Social Security and Medicare

You will be automatically enrolled in Medicare Part A and B when you elect to take your Social Security benefits. But suppose you elect to wait until after you turn 65 to begin receiving your Social Security benefits. In that case, you should apply for Medicare during your initial open enrollment period that occurs close to your 65th birthday.

Your initial Medicare enrollment period begins on the 1st day of the month three months prior to the month in which you turn age 65 and ends the last day of the third month after you turn age 65.

Example: If you turn 65 in July, your open enrollment period begins on April 1st and ends on October 31st.

If you fail to enroll in Medicare Part B during your initial open enrollment period, when you do enroll, you will have to pay a monthly late enrollment penalty for the rest of your life.

For more information on how to coordinate Social Security and Medicare, click here.

Ultimately, deciding when to take Social Security is a personal decision, based on a number of individual circumstances. Most people are better off if they can wait until age 70, but this isn't the case for everyone.