When to Start Claiming Social Security

If you have viewed any retirement planning content at all, you’ve probably heard the advice: “Delay Social Security as long as possible.” While it’s true that waiting to claim Social Security means a bigger monthly check and can make sense for some people, the question is more complicated when it comes to real-life situations. For many retirees, the “right” age to claim depends on more than just the size of the payment they will receive. In this piece, I will explore the various claiming strategies and point out where I think the conventional wisdom on Social Security sometimes falls short.

To start, let’s look at the options for claiming Social Security and the pros and cons of each.

Early Claiming (62–63)

• Pro: You start collecting income right away. This can make early retirement easier, let your investments keep growing, and provide the benefit of more years of Social Security income¹.
• Con: The downside is that your monthly check is permanently reduced by 25–30% compared to waiting until Full Retirement Age (66 or 67). That also means a smaller survivor benefit for your spouse if you pass away first. Lastly, benefits can be withheld if you are still working².

Summary: You get income sooner, but will have a decreased monthly benefit for life.

Who it makes sense for: early retirees who are not comfortable spending down savings and investments, or those who have health problems or do not have a family history of longevity³.

Full Retirement Age (66–67)

• Pro: You receive your full benefit. There’s no earnings limit, so you can keep working without having Social Security withheld⁴.
• Con: You may need to wait several years for income. This can mean relying more on savings or delaying retirement. You also give up the extra 8% per year increase you’d get by waiting until 70⁵.

Summary: This can be a good middle ground — larger benefit than early claiming, but you still receive benefits sooner than delayed claiming.

Who it makes sense for: Those who are unsure of longevity or have average longevity on their side, or those who want to retire at full retirement age and want to simplify their budgeting and retirement cash-flow⁶.

Delayed Claiming (70)

• Pro: You receive the highest possible monthly check, about 24% larger than at full retirement age and about 54% larger than at 62. This also locks in the survivor benefit your spouse would receive⁷.
• Con: You may have to delay retirement or fund your lifestyle without Social Security until age 70. In many cases, this means spending down investments and savings. If you don’t live long enough, you may never “break even” on the delay⁸.

Summary: Maximum income for life if you have longevity and assets to cover the gap, but risky if you don’t.

Who it makes sense for: Those who need or want to work for a long time, those who expect to live a long time, or those who want to try to optimize taxes with Roth conversions and avoid income-related Medicare penalties⁹.

When will you break even?

“Breakeven” is the age where the total Social Security benefit received by waiting surpasses the amount received by claiming early. These figures have been studied exhaustively, and the typical conclusion is that it’s best to wait as long as possible to take Social Security¹⁰. However, these studies do not account for potential portfolio growth: Taking Social Security earlier may allow you to keep funds invested that you would otherwise need to withdraw. Here is a comparison of breakeven age for various portfolio growth outcomes¹¹:

Keep in mind, you can’t be sure that your portfolio will grow if you wait to withdraw, while Social Security payments are guaranteed¹². However, I believe there is more to the equation than many of the studies account for. In addition, there are other factors that can impact the decision¹³.

Here are a few more to think about:

• Sequence of returns risk: Taking heavy portfolio withdrawals (while delaying Social Security) can magnify damage in a market downturn¹⁴.
• Underspending risk: Many retirees find Social Security psychologically easier to spend than portfolio assets¹⁵.
• Health span risk: Money earlier in retirement can be more useful. This is when most have the greatest ability to travel, pursue hobbies, and help family members¹⁶.

In short, there is no easy, universal answer to when one should claim Social Security. Every single person has a different investment risk tolerance, health outlook, and psychological approach to money¹⁷.

If you have any questions about Social Security or would like to run an illustration to see what your benefit would look like at various ages and what your breakeven age would be, feel free to respond to this email and we can schedule a time to speak¹⁸.

References:

1. SSA, “When To Start Receiving Retirement Benefits.” https://www.ssa.gov/benefits/retirement/learn/age.html
2. SSA, “Retirement Planner: If You Work While Receiving Benefits.” https://www.ssa.gov/benefits/retirement/planner/whileworking.html
3. AARP, “Should You Take Social Security at 62?” https://www.aarp.org/retirement/social-security/questions-answers/early-benefits.html
4. SSA, “Full Retirement Age.” https://www.ssa.gov/benefits/retirement/planner/ageincrease.html
5. SSA, “Delayed Retirement Credits.” https://www.ssa.gov/benefits/retirement/planner/delayret.html
6. Center for Retirement Research at Boston College, “Should You Claim Social Security at 62, 66, or 70?” https://crr.bc.edu/
7. SSA, “Delayed Retirement Credits.” https://www.ssa.gov/benefits/retirement/planner/delayret.html
8. Vanguard, “Claiming Social Security early: A spectrum of breakeven and longevity risks.” https://corporate.vanguard.com/content/dam/corp/research/pdf/claiming_social_security_early_spectrum_breakeven_longevity_risks.pdf
9. Morningstar, “The Social Security Claiming Guide.” https://www.morningstar.com/articles/1133686/the-social-security-claiming-guide
10. SSA, “When To Start Receiving Retirement Benefits.” https://www.ssa.gov/benefits/retirement/learn/age.html
11. Journal of Financial Planning, Smith & Smith (2024), “It May Be a Mistake to Delay Social Security Retirement Benefits.”
12. SSA, “Your Retirement Benefit: How It’s Figured.” https://www.ssa.gov/benefits/retirement/estimator.html
13. Kitces.com, “How the Social Security Claiming Decision is a Bet on Longevity (and Discount Rates).” https://www.kitces.com/blog/social-security-claiming-decision-delay-breakeven-discount-rate-longevity-insurance/
14. Vanguard, “Sequence of Returns Risk.” https://advisors.vanguard.com/insights/article/sequencerisk
15. Blanchett, David. “The Impact of Social Security Claiming Strategies on Retirement Income.” PGIM DC Solutions.
16. AARP, “When Should You Take Social Security?” https://www.aarp.org/retirement/social-security/questions-answers/take-benefits.html
17. SSA, “Retirement Benefits Planner.” https://www.ssa.gov/benefits/retirement/planner/
18. SSA, “Retirement Estimator.” https://www.ssa.gov/benefits/retirement/estimator.html