• James Robinson CFP

Social Security Payments -When?

Updated: Jun 25, 2018

When Should You Claim Social Security Payments…Now? Later?

Americans are living longer. That is the very good news. Today’s retirees are living longer on average than those of any previous generation. The average life expectancy in America today is higher than in any other period in history. More specifically, data from a United Nations report shows that the number of people 65 years and older rose from 8% to 12% of the total population between 1950 and 2000. What’s more, this figure will rise to 20% by 2050 and is likely to continue rising steadily thereafter. This is largely due to significant improvements in healthcare services, investment in medical research, and universal health coverage.

Figures published by the Centers for Disease Control and Prevention (CDC) show that babies born in the United States in 1900 had a life expectancy of 50 years. In comparison, Americans born in 2012 have a life expectancy of 78.8 years. In terms of gender, women generally live longer than men, with one in every ten girls born in 2012 expected to live for more than 100 years. American women have a life expectancy of 81.2 years, whereas American men have a life expectancy of 76.4 years.

A Pew Research study, ‘Living to 120 and Beyond: Americans’ Views on Aging, Medical Advances and Radical Life Extension,’ revealed that there are some futurists who believe that medical breakthroughs will slow, stop or reverse the aging process and allow humans to remain healthy and productive to the age of 120 or more.

This same study revealed the not so good news as well. About a fifth of all U.S. adults (18%) say they worry ‘a lot’ and 23% say they worry ‘a little’ about outliving their financial resources in retirement…and this number is growing. Also, fewer adults (13%) consider their personal financial situation to be excellent. Indeed, on a separate question about finances, about four-in-ten Americans (41%) say they worry about outliving their money after retirement. Military servicemembers and veterans are among these groups.


One of the most important decisions that retirees (or soon-to-be-retirees) must make is when to claim their Social Security retirement benefit. The question becomes... How do I get maximum income for all of my life…and my spouse?

This is important because a claim made before full retirement age produces a permanently reduced benefit. If you are not careful, you will receive reduced Social Security benefits for the rest of your life. This, in turn, causes spouses and survivors to receive reduced benefits. Timing is the key.

At What Age Should I Start Receiving My Social Security Retirement Benefits?

The advice that the Social Security Administration gives is that your monthly retirement benefit will be higher if you delay claiming it. You can start receiving your retirement benefit as early as age 62, or as late as age 70. If you claim it early (before your full retirement age), your monthly amount will be reduced. On the other hand, if you delay claiming your benefit, your monthly amount will be increased for each month of delay. These adjustments are permanent for the rest of your life. The increases from delaying your benefit can be large.

For example, a worker with a $1,000 benefit at her full retirement age of 66 would receive $750 a month if she starts her benefit at age 62, or $1,320 a month if she delays until age 70. Married couples have two lives to plan for. If you are the higher earner, delaying starting your retirement benefit means higher monthly benefits for the rest of your life and higher survivor protection for your spouse, if you die first .

However, the Social Security Administration warns that the decision to start receiving your retirement benefit is a highly personal one, based on many factors that may be unique to each individual. For example, in addition to the monthly benefit amount, you may want to consider personal and family circumstances, including whether you are working or plan to work, current and future financial resources and obligations, risk tolerance and current and anticipated health and longevity.

Risk Tolerance

Let’s take a deeper dive into risk tolerance. Retirees who are averse to risk would ordinarily make the claim early, making the bet that they will die sooner rather than later. Some clients might also claim early because of concerns about the future solvency of Social Security. They may believe that it is better to claim benefits at the first opportunity because impending changes to the program might negatively impact or even eliminate their benefits. Increased taxes on benefits, lower cost-of-living adjustments, higher retirement ages, or the introduction of means testing are all possibilities that could threaten benefits. Because Social Security benefits are not guaranteed, some clients may worry that Congress could potentially change the program as it deems necessary to ensure its viability. Although changes to Social Security are certainly possible, reducing beneficiaries’ current and future benefits might be politically difficult to achieve .

Don’t Delay Signing Up for Medicare

Workers who decide to delay claiming their Social Security retirement benefits after age 65 should still sign up for Medicare at age 65. Signing up later than age 65 for Medicare could possibly result in increased Part B and Part D premiums. When you are eligible for Medicare and you are a military servicemember…you may have health care insurance from the Department of Veterans Affairs (VA) or under the TRICARE or CHAMPVA program. Your health benefits may change or end when you become eligible for Medicare. You should contact the contact the VA, or the Department of Defense for guidance as soon as possible.

Calculate the Best Retirement Age to Claim Your Social Security Benefits

Can you afford to retire early and claim benefits at age 62, should you wait until your full retirement age, or can you wait until age 70 in order to receive the largest possible monthly benefit? The decision regarding when to take Social Security benefits depends on many factors. Those who delay claiming are essentially making a trade-off. They are giving up money today in exchange for receiving higher lifetime payments in the future.

A ‘BREAK-EVEN ANALYSIS’ can help clients determine at what point they will benefit from using this strategy; specifically, it answers the question of how long a person must live in order to break even. It identifies the point at which the benefits that were foregone by not claiming early equal the increased benefits paid by delaying a claim. After that point, the beneficiary starts to come out ahead by having delayed taking benefits.

Use the AARP ‘BREAKEVEN CALCULATOR to help you figure out how much retirement income you’ll receive at different claiming ages so you can determine when you should claim Social Security. For many of us, Social Security is the most important part of our retirement picture, and deciding when to claim is a big decision. The amount of your benefit will depend on how much you've paid into the system and how early you claim it.

The ‘Marriage Question”

Typical ‘Social Security Decision Calculators’ are designed

  1. for single people who have never been married

  2. for married couples in their first and only marriage

  3. for divorced individuals whose marriage lasted at least 10 years and who have not remarried.

Also, the rules for marriage apply to same-sex couples residing in states that recognize same-sex marriage or civil-union. Most free calculators do not calculate survivor benefits for widows or widowers. Just be careful when using these calculators. You need good numbers to make good decisions.

Pointers to Remember:

  • The decision to receive reduced benefits at an early age or to wait until full retirement age (or later) to receive larger benefits must be based on your personal needs, health and financial situation.

  • Claiming benefits early may be entirely appropriate for individuals who are in poor health if you think you not going to live very long.

  • A person’s risk tolerance, marital status, health, expected longevity, amount of assets, and ability to continue working must be considered when determining the optimal time to claim benefits.

  • Currently, for an average worker with a consistent work history, the age at which the accumulated value of the higher benefits begins to exceed the accumulated value of reduced benefits taken at an earlier age occurs at some point in the person’s late-70s.

Remember that military services members typically retire twice. Once from military service, typically in their 40s or 50s. Then from civilian jobs at a normal early age of 62 or full retirement age. Here we are discussed strategies for the latter. Hope this helps.

Additional Resources

  • University of Southern California’s Master of Arts in Gerontology (MAG) and Master of Aging Services Management (MASM) website |https://gerontology.usc.edu/resources/infographics/americans-are-living-longer/

  • Living to 120 and Beyond: Americans’ Views on Aging, Medical Advances and Radical Life Extension | Pew Research |http://www.pewforum.org/2013/08/06/living-to-120-and-beyond-americans-views-on-aging-medical-advances-and-radical-life-extension/

  • At what age should I start receiving my Social Security retirement benefits? | Social Security Administration |https://faq.ssa.gov/en-us/Topic/article/KA-03391

  • Social Security Income Strategies 2018 | WebCE.com

  • When Should You Claim Yours? Calculate the best retirement age to claim your Social Security benefits. | AARP | This AARP calculator will help you decide when to claim and how to maximize your benefits. Ihttps://www.aarp.org/work/social-security/social-security-benefits-calculator.html

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