When Should You Start Taking Social Security? (2024)

Determining the best time to begin receiving Social Security benefits is a complex decision.

You might have heard you’re supposed to wait until at least full retirement age, but that advice doesn’t work for everyone. Countless factors, like your own health or ability to easily work, could make postponing Social Security the wrong decision.

Instead, the best Social Security timing strategy is the one that works best for your circ*mstances. To help you plan out your strategy, start by asking yourself the following questions.

Are You Still Working?

Americans can file for Social Security benefits when they turn 62, even if they are still collecting a paycheck. But starting Social Security benefits at age 62 is four to five years before the full retirement age—that’s age 66 and 67, depending on when you were born—when you can expect to receive full benefit payments.

If you begin taking Social Security benefits early, each month between your start date and your full retirement age permanently reduces your monthly payment by about half a percent.

In addition to seeing a permanent reduction in monthly benefit amount, if you are still working while collecting early benefits, you may see some of your Social Security payments withheld because of something called the earnings test.

If you haven’t reached full retirement age, you will see $1 of your Social Security benefits withheld for every $2 over $21,240 that you earn. This test changes to a withholding of $1 in benefits for every $3 you earn above $56,520 up to the month of your birthday during the year you reach full retirement age.

Take a 63-year-old beneficiary who is earning $31,240 per year while also taking Social Security benefits. They are earning $10,000 over the earnings test limit and will see $5,000 withheld from their Social Security benefits.

It’s vital to keep the effect of the earnings test in mind when determining how much Social Security income you can count on in the years leading up to full retirement age. Once you reach full retirement age, you can work as much as you’d like without imperiling your Social Security benefit, though you’ll still be on the hook for any income taxes.

Are You Married?

Your marital status can also affect your Social Security timing. That’s in part because married beneficiaries may be eligible for a spousal benefit based upon their spouse’s work record.

While less common for the generation currently retiring than it was previously, auxiliary spouse benefits are available to people with limited or no work history. This benefit allows someone to qualify for up to 50% of their spouse’s Primary Insurance Amount (PIA), which is the amount they would get at their full retirement age.

Taking spouse’s benefits before your full retirement age will reduce the amount you can get.

If the higher earner in a couple takes their benefits early, it won’t affect what the lower earner can qualify for on spouse’s benefits, but it will reduce their survivor benefits if they outlive their higher-earning spouse.

“Most people should wait as long as possible to file for benefits, but it’s particularly important for the higher earner in a couple to delay, since that’s the benefit that determines what the survivor gets,” says Liz Weston, certified financial planner (CFP) and author of “The 10 Commandments of Money,”

Because survivor benefits are based on the actual benefit amount of the decedent, rather than simply the PIA, waiting to take benefits as a higher earner can increase your spouse’s future benefit if you pass before them.

Keep in mind, too. If your spouse dies, you will only be eligible for one benefit—the higher of yours or theirs, not both.

Are You Currently Healthy?

Your health status could affect your decision, although not in the way you might expect. Beneficiaries already struggling with poor health in their early 60s may be tempted to take benefits as early as they can.

Receiving lower payments earlier means you get more benefits over a lifetime if you pass away relatively young. In general, the “break-even” point falls at about age 80 and four months when comparing lifetime benefits starting at 62 with a reduced benefit and starting at 70 with an increased benefit.

For those who are currently ill and concerned they won’t live to age 80, early benefits may sound like the right call. But Weston cautions against this.

“Starting early is a common timing mistake, especially if you think you won’t live beyond the break-even age where the larger checks for waiting more than offset the smaller checks you passed up,” she says.

Weston’s concern about this strategy is if you outlive the break-even point and are stuck receiving a reduced benefit while also suffering from poor health.

“Most people don’t understand how long they’re likely to live and the risks if they outlive their savings,” says Weston.

Be sure to take careful stock of your financial and physical health when deciding when to start benefits. If your health is severe enough to prevent you from working, applying for Social Security Disability benefits is a better alternative than taking early retirement. If you’re approved, you’ll be eligible for your full PIA on Disability and get Medicare coverage sooner.

Do You Have an Immediate Use for the Money?

One of the most common reasons for taking Social Security early is simply because you need it. If your Social Security benefit is the only way you can keep the lights on, then it’s reasonable to file for it when you need it.

However, it’s important to remember that working longer in your 60s to delay Social Security may be far easier than living on a reduced benefit in your 80s, especially if you’re physically able to work now.

But what if you have no immediate use for the money but think you might be able to manage it better than Uncle Sam? Your Social Security benefit can feel like “free” money you can take now to grow into larger retirement income later.

But Weston and Kate Horrell, an Accredited Financial Counselor and the founder of KateHorrell.com, don’t see this as the optimal use of your Social Security benefit.

“You may invest your Social Security income, but it does not count as earned income to be placed into an individual retirement account (IRA),” says Horrell.

That means if Social Security is your only income, you may not be able to contribute to an IRA, and if it isn’t, you’ll be limited to the lesser of $7,000, the IRA contribution limit for those over 50, or the amount you make outside of Social Security.

You’ll also be taking on substantial risk to get a level of return Social Security itself will provide. “You aren’t going to get a guaranteed 8% annual return,” Weston says, referencing the approximate 8% long-term average annual return of major indexes like the . “8% per year is what you get by delaying past your full retirement age (until your benefit maxes out at 70). Elsewhere, getting an 8% return requires a substantial risk that you’ll lose money.”

Are you Retiring in a Recession?

If you’ve been laid off and need cash to live on during a recession, you have a tough choice to make. You can take money out of your investments, potentially locking in losses, or you can claim Social Security early.

Social Security provides a guaranteed 8% rate of return for waiting, and the stock market offers no guaranteed returns. But avoiding drawing down your portfolio and giving it time to rebound may leave you in a better position over the long term. In the 14 bear markets since 1945, the S&P 500 has fully recouped losses within an average of 23 months.

Past returns aren’t guarantees of future results, but if your portfolio is down over 20% in a bear market, waiting for it to recoup those losses may be worth it. Taking Social Security in the meantime could be a smart move.

The Bottom Line

Timing your Social Security benefits is a complex decision that will vary from person to person. Knowing the answers to the above questions will help you gauge when might be right for you, but consider speaking to a retirement professional, like a CFP, to map out when may be the right time to file for Social Security.