Social Security. You know it’s coming. You know you’ll want it. For many Americans, Social Security will comprise the majority of their retirement income. So how much will you get?

Many are surprised to learn that it’s up to them. When to begin taking Social Security is one of the most crucial decisions you will make in retirement.

Timing is important

Social Security benefit amounts are based on when you start taking benefits relative to your full retirement age (FRA). For most people, you can start taking benefits as early as age 62, but your benefit increases 8% for every year up until age 70. The longer you wait, the more you get.

The implications are obvious. Take Social Security too soon, and your check may be insufficient to meet your retirement goals. Take it too late, and you could be leaving thousands of dollars on the table.

Consider your health 

Health is a major consideration in deciding when to begin taking benefits. While it might seem a little depressing, an honest assessment of your health may help you maximize your benefits.

Set up an appointment with your doctor. Take an honest look at the numbers and make a choice about when to start taking Social Security. If you work with an advisor, they will have table and estimators at their disposal to help you decide based on tangible criteria.

Look at your overall financial plan. When do you plan to retire? How does that align with your life expectancy?

Understand tax law and how Social Security treats income

Yep. Social Security benefits are taxed. For example, 50% of income is taxable between $25,000 and $34,000. Now, those are not dollar-for-dollar taxes. You don’t lose every penny beyond a certain amount, but it is something to consider.

Further, if you plan to continue working, realize that your income can reduce your benefit. If you are under full retirement age for the entire year, the government will deduct $1 in benefits for every $2 you earn above a limit of $18,960 for 2021. This is no longer the case once you reach full retirement age.

Consider the impact on survivor benefits

Social Security also pays out benefits to your spouse in the event of your passing, provided you have worked long enough and amassed enough credits (based on income). But in order to claim your spousal benefit, your spouse must have already started taking Social Security payments.

Your spousal benefit is worth up to 50% of your spouse’s Social Security benefit. But if you begin claiming the benefit before the age of 62, you will receive a reduced benefit. Again, timing is everything.

These aren’t easy decisions, but a seasoned advisor will have plenty of experience dealing with these questions. Start planning now to make sure you are making the appropriate choices regarding your benefit.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This article was originally published in the Pioneer Press. You may view the article here.