• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Wealth Pilgrim

No Money Worries. No Matter What.

Neal Frankle featured in
  • Home
  • Life Insurance
  • Investing
    • Build Strong Investment Building Blocks To Avoid Going Broke In Retirement
    • Systematic Mutual Fund and ETF Investing
    • Stock Market Investing Guide
    • Choosing the Right Investment Brokerage Guide
    • How Bonds Work Guide
    • How Banks Really Work Guide
    • Annuities – What You Need To Know Before You Invest
    • A Beginners Guide To Buying Individual Stocks
    • Create A Pool Of Great Mutual Funds and ETFs To Pick From To Secure Your Retirement
    • ETF and Index Fund Investment Guide
  • Earn More
  • Banking
  • Retirement Planning
    • Retirement Guide
  • Reviews
    • Upgrade Personal Loans Review
    • Lending Club Review
    • Prosper Review
    • Ally Invest TradeKing Review
    • CIT Bank Review
    • LegalZoom Review
    • Lexington Law Review
    • Airbnb Host Review
    • Should You Drive For Uber?
  • Tax
  • Courses
    • Raise Your Credit Score So You Can Buy a House – Free Video Course

When to Take Social Security Benefits

by Neal Frankle, CFP ®, The article represents the author's opinion. This post may contain affiliate links. Please read our disclosure for more info.

If you want to know when to take Social Security benefits, the answer is “as late as possible” up to age 70. This is true in almost all cases (I’ll discuss when you should not adhere to this advice.) The issue of when to take benefits isn’t a question of how to maximize your income. It’s a question of how to minimize your risk. Let me explain.

Depending on the year you were born, the Social Security Administration has a “full retirement age” for you. Consider the following chart provided by the Social Security Administration:

When to Take Social Security Benefits

This “full retirement age” is the age at which you’ll get 100% of the benefits you’ve earned. If you retire prior to that (the earliest is age 62), your benefits will be reduced. If you retire after that age, you will receive more monthly income. Keep in mind that all future benefits and cost-of-living adjustments are built around the age at which you retire. That’s why this is so important.

Want to know exactly how much your benefits are reduced by if you retire prior to your full retirement age? Let’s assume you were born after 1960.

If you apply for SSI benefits at age 62, you’ll only get 70% of what you would receive at full retirement age. And your spouse would only get 32.5% of what he or she would get in Social Security spousal benefits. If you retire at 65, you get 86.7% and your spouse gets 41.7%.

But there is some very good news for patient people. For every year you delay your benefits after you reach full retirement age, your annual benefits increase by 8%. (If you delay beyond age 70, you will not receive additional increases.)

So let’s go back to our example of the person born in 1960. Her full retirement age is 67. If she delays retirement until age 70, she’ll receive 124% of the monthly benefit she would have received had she retired at 67. (And the annual cost of living adjustments will be larger as well.) Let’s put this in dollars and cents.

Mary was born in 1960. Assume that her monthly benefit at full retirement age is $1,000. Here’s how the numbers shake out:

If Mary Retires at Age: Her Monthly Income Is:

62 $1,400

65 $1,734

67 $2,000

70 $2,480

You can see that Mary has a strong incentive to delay making a claim until age 70. You might ask, what if Mary dies the day after she reaches age 70? She could have received all those benefits from age 62 through her date of death. But because she waited, she didn’t get a dime. This is true. And if you know exactly when you are going to die, it makes planning a whole lot easier.

But most of us don’t know when we’re going to pass away. As a result, you have to plan for the “worst financial case.” The “worst financial case” is that you’re going to live a very long time and need to support yourself. If that happens, you’ll be far better off with the extra retirement income. If you don’t live long, don’t worry. You won’t know the difference.

Let’s assume Mary dies at age 80. If she would have taken benefits starting at age 62, her total payments would come to $302,400 over her life (excluding cost-of-living adjustments). If she starts getting her income checks at age 70 and dies at age 80, she’ll “only” take in $297,600. So by delaying her claim until age 70, she takes in a little less income. But she has tremendous upside potential if she survives because of the increased benefits. And I don’t need to tell you that the odds are in her favor. Longevity is expanding every day. (Here’s a link for you to determine your own longevity.)

The bottom line is that you should delay taking your Social Security benefits until age 70.

When should you ignore everything I said above?

If you absolutely need that extra income right now, get your Social Security ASAP. In this case, you don’t have an alternative. Also, if you are ill and have limited longevity, you might go for the benefits now.

I said at the start of this post that you should make this decision based on your risk tolerance. If you want to minimize the risk of running out of money as you age and you can afford to delay taking benefits until age 70, that’s the way to go. If you are a risk-taker and want to maximize your short-term income, take the benefits now if you are willing to bet that:

a. you won’t live that long

b. you won’t need the money when you get older

But for most of us, delaying Social Security benefit claims is the way to go. Where do you stand on this issue? When are you going to take your benefits? Why?

 

Tweet
Pin
Share2

Reader Interactions

User Generated Content (UGC) Disclosure: Please note that the opinions of the commenters are not necessarily the opinions of this site.

Comments

  1. Chuck Mink says

    December 26, 2011 at 10:39 AM

    Neal, very good article; however, You mention how much the spouse can get if you start before full age, but not after that. For example even if you wait until 70, the spouse rate does not go up, but remains the same as if you had taken yours at 100% and that remains the same for the rest of her life. I thought the increase would benefit her for life. Wrong!

    Reply
    • Neal Frankle says

      December 26, 2011 at 12:22 PM

      Excellent point Chuck – and one I had not considered! Thanks for bringing it up sir.

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Are You Human? * Time limit is exhausted. Please reload CAPTCHA.

Primary Sidebar

Who is Neal Frankle

Neal Frankle

I'm a CERTIFIED FINANCIAL PLANNER™ Professional with more than 25 years of experience. I feel very blessed and hope to share my personal financial experience and professional wisdom with readers of WealthPilgrim.
Read More »

Stay Connected

Facebook Twitter YouTube RSS
We are on YouTube
Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement.  We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement. We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

YouTube Video UCoU0buhwVplzXrsyf342nOg

Retirement Crusaders

June 10, 2022 12:19 PM

Subscribe
This error message is only visible to WordPress admins

Error 403: Requests from referer are blocked..

Domain code: global
Reason code: forbidden

More Categories

Career Development
College Funding
Credit Cards
Credit Score Fixes
Money and Marriage
Debt Relief
Estate Protection
Property Investment Loans
Small Business Strategies
Spend Less Money
Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement.  We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

Retirement financial education for people age 55+ seeking to retire well and for those retired seeking to enjoy a better retirement. We discuss retirement planning, retirement investments, taxes in retirement, retirement spending, IRA and 401k distributions and we will personally answer questions that you pose in the video comments.

While so much financial information is about preparing for retirement, what about managing your finances in your retirement years? That's exactly what we cover at Retirement Crusaders.

Neal Frankle is a retired registered investment adviser. Larry Klein is a retired financial advisor and retired CPA. They have 70 years of financial advising experience to share so that you have your best retirement years.

YouTube Video UCoU0buhwVplzXrsyf342nOg

Retirement Crusaders

June 10, 2022 12:19 PM

Subscribe
This error message is only visible to WordPress admins

Error 403: Requests from referer are blocked..

Domain code: global
Reason code: forbidden

Disclaimer

Wealth Pilgrim is not responsible for and does not endorse any advertising, products or resource available from advertisements on this website. Wealth Pilgrim receives compensation from Google for advertising space on this website, but does not control the advertising selection or content. Please do the appropriate research before participating in any third party offers. The information contained in WealthPilgrim.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation. Wealth Pilgrim does not provide investment advisory services and is not a registered investment adviser. Neal may provide advisory services through Wealth Resources Group, a registered investment adviser. Wealth Pilgrim and Wealth Resources Group are affiliated companies. In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving payments,access to free products and services for product and service reviews and giveaways. Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.


About · Contact · Disclaimer & Privacy policy

Copyright © Wealth Pilgrim 2023 All Rights Reserved