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When to Take Social Security Retirement Benefits

When to Take Social Security Retirement Benefits
Elder Law
Jason Neufeld
July 2, 2019

While about 1/3rd of Americans expect social security to be a primary source of income, most Americans don’t know much about the social security retirement program. For example: do you know your full retirement age? Did you know that if you take benefits too early, you’ll receive a permanent reduction in benefits. On the other hand, if you delay taking your benefits you may receive a higher monthly social security check. But if you delay taking benefits that means you forego tens of thousands of dollars!  Its confusing to figure out the best time to take one's social security retirement benefits (no matter when you were born, the earliest you can take retirement is age 62. The latest age you can retire is age 70....well you can start retirement after age 70, but there is no benefit to doing so).

So let’s start with a few basics:

What is Social Security Full Retirement?  

“Full Retirement” in social security parlance means the age when you are eligible to receive full retirement benefits from the social security administration (SSA). Many think that full retirement age is 65 (because it was that way for many years). However, there is now a sliding scale for people who were born between 1938 through 1960.  Below, I've given just a few examples: To calculate your full retirement age, click on this social security retirement age calculator.  

If you were born between 1943 – 1954, your full retirement age (FRA) is 66.

  • At 62, you will get 75% of the “full-retirement” monthly benefit
  • At 65, you will get 93.3% of the monthly benefit 

If you were born in 1955, FRA is 66 and 2 months. Born in 1956, FRA = 66 and 4 months. 1957, FRA = 66 and 6 months.

If you were born in 1958, your full retirement age is 66 and 8 months.  1959, FRA = 66 and 10 months.

If you were born in 1960 or later, your full retirement age is 67. 

  • At 62, you will get 70% of the "full retirement" monthly benefit
  • At 70, which is when the increase benefit of delaying retirement stops accruing, you'll have a 24% higher monthly retirement benefit for the rest of your life!

Can I take my social security before I reach full retirement age? 

Yes. You can start your social security retirement benefits early at age 62 if you are willing to accept a lower monthly retirement benefit compared to full retirement age.

If you take your social security benefits early, the reduction in benefits is permanent. You will never get any rate increase other than a very small cost-of-living adjustment that all social security retirees get. In other words, you wont get your full benefits upon reaching 67 (for those born in 1960 or later) if you decide to start taking benefits earlier.  

Can I file for my social security retirement benefits after I reach full retirement age?

Yes. If you claim social security retirement benefits after full retirement age, your benefits will increase by 2/3rd of 1% for each month you delay until age 70. There is no reason to wait any longer because you don't get any corresponding benefit. There are no further increases in social security retirement benefits after reaching age 70.

While a delay in claiming social security retirement results in a higher monthly benefit (until age 70), the big question becomes: is it worthwhile to delay taking social security retirement to get that higher monthly check when, in order to do so, one must to forego all those years of not receiving any retirement benefit at all.

In other words, many people ask themselves,

"Should I take my retirement benefits at age 62 (even though I'll get paid a lower monthly amount)?" or
"Should I wait until age 70 (and get a higher monthly government check but lose out on eight years worth of payments)?" 

Is it better to take social security retirement benefits earlier or better to wait until after full retirement age?  

For some people, the question answers itself. Mainly, those who are not working or otherwise cannot afford basic living expenses at age 61, will likely have to jump at the opportunity to get a little extra income at age 62. But, if you're able to meet more than just basic food and shelter expenses (maybe even afford a few small luxuries or occasional vacation on top), the answer is trickier and has much to do with your health.

The reality is: determining whether to file for social security retirement benefits early, at full retirement age, or waiting until age 70 depends on how long you expect to live. By waiting and delaying taking social security retirement payments, you have to think about the point at which you'll make up for all that lost money.

The real question is: When do you break even? 

You can calculate your “break-even” point by adding up the amount you missed (by claiming late) and dividing the by the higher monthly benefits received due to the delayed benefit, which will equal the number of months it takes to break even.  

There is a really neat chart at the financial publication: Motley Fool that explains how and when you’ll break even. Their chart assumes full retirement at age 67 for an American who would receive a monthly retirement benefit of $1,404 / month (the average social security retirement benefit in 2018).  

For example, if you wait until age 67 you will miss out on $58,980 in the five year period where you decided to forego the benefits you would have received by taking benefits early at age 62. It will take you 11.7 years to break even. This means that if you live beyond age 78.7, congratulations, you have made the right decision (from a strictly financial gain perspective). If you pass away before age 78.7, you will have left money on the proverbial table.  

On the other hand, if you wait until age 70, you will miss $94,368 in the 8 year time frame you delayed taking benefits, which results in breaking even at age 80.4.  

No one can predict the future, but a good rule of thumb is that if you are not in good health, you want to take your benefits earlier. If you are in good health, have a family history of longevity or still working, you'll likely want to consider delaying at least for a little while.  

Social Security Retirement Resources:

Jason Neufeld

Jason Neufeld is the Founder and Managing Partner of Elder Needs Law, a Florida estate planning and elder law firm he created in 2017. With more than 15 years of experience practicing law, he represents clients in a wide range of legal matters, including Medicaid planning, estate planning, elder law, probate, Medicare, and life insurance.

Jason received his Juris Doctor from the University of Miami — School of Law and is a member of the Florida Bar and the Broward County Bar Association. He has received numerous accolades for his work, including being named a Rising Star and Super Lawyer by Super Lawyers and among the Florida Legal Elite by Florida Trend in 2024.

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