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When should I take Social Security?

When should I take Social Security?

July 29, 2019

Data shows that a majority of Americans are losing thousands of dollars each year because they chose to start taking Social Security at the wrong time. One national study shows that retirees as a group will lose $3.4 trillion in income they could have received over their lifetime because they start taking Social Security the wrong time. The average loss is $110,000 per household.

The ideal time for you and your family to start taking your Social Security income benefit will depend on several factors. You may want some advice

But here are a few things that are true for everybody when it comes to Social Security income benefits:

  • Your maximum monthly benefit is paid if you start at age 70.
  • Standard benefit is paid if you start at full retirement age which is 67 for most of us.
  • Reduced benefit is paid if you start early at age 62.
  • Every income benefit includes a cost of living increase.
  • Every benefit lasts for life.
  • The maximum benefit for a worker claiming at full retirement age in 2019 is $2,788 per month or $33,456 per year.

The graph below says it all. The strategy most people employ when they do claim Social Security (green line) is the opposite of what they should do in claiming Social Security (purple line), according to the study, The Retirement Solution Hiding in Plain Sight.

Source: Health and Retirement Study, United Income.

You can retire and delay taking Social Security.

Quitting the high-paying, high-stress career you now have does not mean you need to start taking Social Security. If you really need to quit your job, it doesn’t mean you have to start taking Social Security. In fact, it can make a huge difference to your overall retirement income if you work longer in life, and let your Social Security benefit compound, even if you don’t earn at the rate you did at your peak earning years.

Why should I delay taking social security? 

Starting Social Security benefits at 70 makes great sense if you manage to live to age 81. The longer you live, the more the benefit accumulates. The challenge for people about to retire is that they generally have a really hard time realizing that about three out of five 65-year-olds will live to be 80 and one in three will live to 90.

Source: The Hamilton Project.

Regardless of the reason, the United Income Study showed that only 4 percent of retirees make the very best claiming decision. The study found that a claiming age of 62 to 64 is optimal for only about 8 percent of adults (primarily those with short life expectancies or low-earning spouses)—yet about 79 percent of eligible adults in the sample claimed at those ages. A claiming age of 70 is optimal for 71 percent of primary wage earners—yet only 4 percent of the adults in the sample claimed at that age.

Among those at the highest wealth levels, 99 percent make less than ideal claiming decisions. Yes, you read that right. Ninety-nine percent of higher-wealth households make suboptimal claiming decisions. If you make a good living, be sure to get some advice around when to claim Social Security benefits. It could make a big difference.

If you want help understanding how Social Security income benefits fit with your overall family retirement goals, you might want the help of a CERTIFIED FINANCIAL PLANNER™ professional.

To find a CFP® professional near you, start your search here

As you visit with financial planners, I suggest a couple things to check:

  • Is the advisor always the client’s advocate – a fiduciary advisor?
  • Is the advisor only paid by clients, not any financial product manufacturer or distribution network? That would be a fee-only advisor.

These two points help assure that you are working with a professional who is committed to your best interest at all times. It seems sort of obvious to me that a professional would work in this way, but it’s not automatic. 

A fiduciary, fee-only, CFP® professional can help you make great retirement income choices and develop a comprehensive financial plan that is driven by your goals and priorities and addresses all aspects of your financial life. With a big-picture approach, you will be better prepared to understand your options at every step along the way.

Yes, I am a CFP® professional. I’m always a fiduciary and I only work on a fee basis. And yes, I’m still taking on a few great families to be part of my financial planning practice.

If this article has you thinking about your own circumstances, contact my office at I am always happy to meet with people who are working on their retirement plans. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.