When to take Social Security is a crucial retirement planning decisionWhen to take Social Security is a crucial retirement planning decision

How to Decide When to Take Social Security

One of the first questions we ask anyone who comes in for a consultation is, “What age do you think you’ll retire?”

It’s a question that almost immediately elicits an emotional response. After decades of working for a living, retirement is the ultimate reward. You’re finally free to spend your time as you wish!

But since you have to fund this new chapter of your life, you must think carefully about when it makes the most sense to leave your job.

Social Security provides the foundation for income replacement in retirement, and 9 out of 10 people over 65 receive a Social Security benefit. But for someone who worked for most of their adult life and retires at 65, Social Security replaces only about 37% of their income.

Of course, if you delay your benefit (up to age 70), your monthly check will be larger than if you choose to take it when you first become eligible. So, it was surprising to learn that the median retirement age among those who have already retired was 62.1

Now, there are many reasons why you would need to retire early.

Sometimes it’s downsizing. Sometimes there’s unforeseen health events – either for you or your spouse. Or maybe you just decide you’re ready to retire. Whether it’s an expected or unexpected decision to retire early, you need to have a plan for how you’ll pay for your expenses.

You may still have a mortgage. And even if you’ve paid for your home, you’ll still have to pay property tax. Then there’s healthcare, food, and (hopefully) the fun stuff like travel.

Although you’ll withdraw money from your retirement accounts, you’ll need more than just your savings. Knowing you can count on regular and consistent sources of monthly income is reassuring. That’s why it’s so important to be thoughtful about your Social Security claiming decision – especially for the 40% of Americans who say that Social Security is their only source of income in retirement.2

What to Consider Before You Decide When to Claim Social Security

Your decision about when to claim Social Security is not one you should take lightly. It’s not only about choosing the age you’ll turn on benefits. Learn more below.

Lost Benefits

Most people nearing retirement age are aware that if they delay their claim, they’ll receive more benefits each month for the rest of their lives. But how much could they lose by not waiting until age 70?

In 2018, Boston University economics professor, Laurence Kotlikoff, aimed to quantify the potential benefit loss by applying a sophisticated analytics program to 20 years of data from the American Community Survey – a Census Bureau publication.

Professor Kotlikoff and his colleagues concluded that the median household loss in lifetime discretionary income was $182,370.

Of course, the results are dependent on household characteristics, and $182,370 is the median value. But Kotlikoff and his team were confident that 90% of workers aged 45-62 would benefit from claiming at 70.

Waiting until the latest Social Security claiming age might not be the optimal decision for you, but it makes sense to consider what you might leave on the table if you decide to claim early.

Spousal Benefits

If you’re married, your spouse may be eligible for Social Security spousal benefits based on your retirement record – even if your spouse also has a working history and has earned credits. To prevent confusion, we’ll refer to the spouse whose working record is the basis for the other spouse’s benefits as the “worker”:

  • The spouse must be age 62 or older.
  • The benefit amount depends on when the worker starts to claim their own benefits. The spousal benefit may be reduced if that start date was prior to when full retirement benefits begin. However, the maximum benefit is half of what the worker receives.
  • If the spouse has a working history and earned credits – and that amount is higher than what would be earned with spousal benefits – the spouse will receive the higher amount.
  • A spouse cannot turn on spousal benefits and later switch to their own benefit.

Ex-spouses can also claim Social Security benefits based on their former partner’s work record, but there are conditions. The marriage must have lasted ten years or longer, and the spouse must be at least 62 and not remarried. Additionally, if the spouse is eligible to receive benefits on their own work record, they’ll get whichever benefit is higher. And switching to their own benefit later on is not allowed.

Note that the Social Security benefit an ex-spouse receives based on your work record will not impact your own benefit amount when you claim.

Collecting Social Security While Working

A listener emailed me recently and asked this question:

I turned 62 in March. Will I be able to get half of my husband’s benefit when he retires? I want to continue to work part time and collect Social Security. Please advise on benefits and possible negatives.

We’ve already answered the part about collecting spousal benefits, but you should know how collecting Social Security while working can affect the amount you’ll receive.

If you choose to continue working while you’re receiving a monthly Social Security Benefit, your benefit amount will be reduced if you’re younger than full retirement age and you earn more income than the limit set by the Social Security Administration.

The limit changes every year, but for 2024, it’s $22,320 if you’ re younger than full retirement age for the entire year. The Social Security Administration will deduct $1 from your benefit for every $2 above that limit.

However, in the year you will reach full retirement age, the deduction is $1 for every $3 above a $59,520 limit.

These limits apply whether you’re receiving your own benefit or a spousal benefit.

One thing not addressed earlier is that while you can’t take a spousal benefit and later switch to your own, you can pivot to a spousal benefit after having filed for your own. Per the question above, the woman’s husband plans to work another four or five years, and at that point, a spousal benefit would be worth more than what she was earning based on her own work record.

How Can You Maximize Your Social Security Benefit?

With so many Social Security rules (2,728!) and a variety of ways to structure your claiming strategy, it can be challenging to figure out how to maximize your benefit.

We talked about Professor Kotlikoff earlier. He wrote a great book – Get What’s Yours – that details how to maximize Social Security benefits. He covers a lot more than we have room to discuss here.

But if you’re interested in discovering your own optimal claiming strategy, we offer a great resource. It’s a Social Security Analyzer that uses your information to highlight how you can maximize benefits. It will even show you alternative strategies and side-by-side comparisons.

There’s no charge for this analysis and no further obligation. If you’re struggling to decide on a claiming strategy, this report may provide some clarity so you can make an informed decision about when to take Social Security. To get your custom report, schedule an appointment here, give us a call, or send an email.


12024 Retirement Confidence Survey – Employee Benefit Research Institute

2 National Institute on Retirement Security

Tom Fortino and/or Alpha Wealth Group are not affiliated with or endorsed by the Social Security Administration or any other government agency.