Dear Rusty: I’d like to get advice on when I should begin taking my Social Security benefit. I turned 66 in October of 2020. Signed: Pondering Retirement
Dear Pondering: Deciding when to claim your Social Security benefit is a personal choice which should consider several factors, most importantly:
• Your need for the money at this time
• Your current health and expected longevity
• Your marital status
Since you have already reached your full retirement age (FRA) for Social Security purposes, you are no longer subject to the “earnings test” which limits how much you can earn. So, working won’t affect your monthly SS benefit amount in any way. But it could influence your decision on when to claim, because if working enables you to delay claiming Social Security until after your FRA, your benefit amount when you eventually claim will be higher.
In October 2020 you started earning Delayed Retirement Credits (DRCs) at the rate of .67% for each full month you delay past your FRA. That means that for each full year you delay claiming, your benefit will be 8% more. You can earn DRCs until you are 70, at which point your Social Security benefit would reach maximum and be 32% more than it would be at your FRA. But delaying only makes sense if you don’t urgently need the money now, and if you expect to enjoy at least average longevity (which is about 84 for a man your age today). If you delay until age 70 to claim, your “break-even age” (the age at which you will have collected the same amount of SS money as if you claim now) will be about 83. And if you live longer than that, you’ll continue to enjoy that higher SS benefit for the rest of your life, and you’ll collect more in cumulative lifetime benefits.
A higher benefit at an older age can be quite beneficial to offset inflation and is especially helpful if you’re married and your wife outlives you. If you are married and you predecease your wife, she will get 100% of the benefit you are receiving at your death, if that is more than her own benefit from her own lifetime work record and if she has reached her own FRA when she claims her widow’s benefit. So, for example, if you claim now at your FRA, your widow later will get your FRA amount when you pass. But if you delay past your FRA to claim, when you pass your widow will get the higher benefit amount you are receiving because you delayed claiming. In other words, when you claim your Social Security benefits can, if you are married, affect the benefit your widow will get if you die first.
So, the bottom line is this: In deciding when to claim your Social Security you should consider your current financial needs, your health and expected longevity, and your marital status. Carefully evaluating the above factors will help you to decide the best age at which to claim your Social Security benefits.
Russell Gloor is an Association of Mature American Citizens certified social security advisor. To submit a question, visit amacfoundation.org/programs/social-security-advisory or email ssadvisor@amacfoundation.org.
