When to Start Taking Social Security

One of the most popular questions we get from our clients who are nearing retirement is “When should I start taking my Social Security retirement benefit?” This is such an important question to ask, and the answer is complex and very personalized.



Historically, full retirement was age 65 for most pensions and for Social Security benefits. In 1983, Congress created amendments that gradually increased full retirement age from 65 to 67 over 22 years. The year you were born will determine when you will reach full retirement age. Full retirement age is important because that is the age when you will receive your full benefit (based on your earnings history) without any reductions or increases. However, you can start collecting benefits as early as age 62 or delay benefits until age 70.

You can find your full retirement age at the Social Security website.

Collecting Social Security Early

If you decide to receive benefits early, you will receive a permanent reduction in your monthly benefit based on the age when your benefits began. The amount of this reduction varies based on your full retirement age—the later your full retirement age, the larger the reduction for drawing early. If you start receiving benefits at age 62, the reduction will range from 30% to 20%. See your specific reduction amounts here.

It is important to note that if you begin receiving benefits early, you will be subject to an annual earnings limitation on any earned income. Earned income is income from work, not from pensions, annuities, or investments. For 2019, the earned-income limit is $17,640. If you earn income over this limit, you lose $1 in benefits for every $2 earned over this limit. There is a more generous limit for the year you reach full retirement age. Once you reach full retirement age, there is no earnings limit.

Delaying Social Security Benefits

If you choose to delay benefits past full retirement age, you will receive an increase in your benefit for each month you wait. The amount of this increase varies based on your year of birth. If you delay benefits to age 70, the increase will range from 24% to 32.7%. See your specific increase amounts here. As with a reduction for starting early, the increase for delaying benefits is calculated on a month-to-month basis.

Comparing Your Options

The optimal timing of when to begin benefits differs for each person based on their unique circumstances. It is further complicated by the fact that none of us knows how long we are going to live, and life expectancy is an important factor in making this decision.

A common term when discussing benefits is “breakeven age.” This is the age when you would have been better off waiting to receive benefits (at a higher amount) rather than drawing benefits early. It seems like calculating a breakeven age should be straightforward; however, there are different ways to calculate this age, and the distinction is important.

The main distinction is whether to use a discount rate in the calculation. Think of using a discount rate as taking opportunity cost into consideration. If you were to wait to draw Social Security benefits, in theory you would instead need to take withdrawals from your investment assets. Because you had to withdraw assets, rather than letting them continue to earn income and grow, that is a “cost” of that decision.

Example: Individual A was born in 1958 and decides to wait until full retirement age to begin their benefits (age 66 and 8 months).

  • No discount rate: They would have to live until age 78 for the amount of benefits they received (at a higher monthly amount) to overcome the fact that they waited 4 years and 8 months to begin benefits.
  • 4% discount rate: They would have to live until age 84 for the amount of benefits they received (at a higher monthly amount) to overcome the fact that they waited to begin benefits (and thus lost potential earnings on their investments).

We recommend always factoring in an appropriate discount rate when calculating your breakeven age. This will give you a more accurate picture of how the timing of benefits impacts your overall financial picture.

Once you have your breakeven age, you should consider your life expectancy and how that compares with the breakeven age in your situation. This is harder to quantify because while you can look at family history, each person’s experience will be different.

Survivor Benefits

If you are married, it is important to note that when a spouse dies, the surviving spouse keeps the larger of the two Social Security benefits. For this reason, the spouse with the higher benefit may decide to delay benefits to ensure that there is a larger survivor benefit available to their spouse if they were to die first.

Spousal Benefits

Another consideration for married couples is the spousal benefit. You may be entitled to half of your spouse’s full retirement age benefit if that amount is larger than your personal Social Security benefit based on your own earnings history.

While spousal benefits can begin as early as age 62, the benefit will be reduced for starting early, similar to early benefits on your own earnings record. Also, spousal benefits cannot begin until the person with that earnings history has applied for benefits.

Making the Decision

The decision of when to start benefits requires consideration of quite a few factors, including life expectancy, other available assets, and potential earned income. Consider working with a financial advisor that operates as a full-time fiduciary to help you answer these and any other questions.

At Clayton Wealth Partners, we are Topeka-based, full-time fiduciary financial advisors, and we are here to help with all of your financial questions and concerns. Our fee-only service model ensures that we operate in your best interest.

Contact us for a complimentary needs assessment phone call.

Barbara Duncan, CFP®

As Partner and Senior Wealth Advisor, Barbara Duncan's favorite moments come when a client reaches a long-sought milestone and shares their appreciation for her help in reaching it.