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Updated January 2022.

If you are thinking about applying for Social Security benefits you may be wondering whether taking them early is as wise as waiting to collect a bigger check. As with many retirement planning questions, the answer depends on your unique circumstances. Does an objective look at the math offer a compelling argument either way?

Social Security Benefits and Full Retirement Age

Before we crunch the numbers, let’s look at the factors that go into the calculation.

Social Security had for decades referred to age 65 as normal retirement age. The definition is a little different now. Today it’s called Full Retirement Age (FRA) and it’s a moving target.

Here’s what FRA is if you were born.

  • between 1943 and 1954: 66
  • between 1955 and 1959: 66 and change
  • in 1960 or later: 67

Starting with those born in 1955, FRA is 66 and two months. Add an additional two months for each year after that until you get to 1959. FRA for those born in 1959 is 66 and 10 months. Straightforward, right?

Okay, on to the math…

Numbers Don’t lie – Neither do They Answer any Questions

To determine whether it makes sense to apply for Social Security benefits early or to delay them requires an understanding of the numbers that go into the equation. And here’s why FRA matters.

It’s the age at which you are entitled to your (wait for it) full benefit.

If you take Social Security early, the amount you receive will be discounted. Now, the flipside is that if you delay, your benefit increases. Let’s look at an example.

According to the Social Security Administration, a 62 year old (entitled to the maximum monthly benefit) retiring in 2022 would receive $2,364.i If this person waits until FRA at 67, then the amount jumps to $3,568. Waiting until age 70 takes the payment to $4,194.

So, the numbers don’t lie. Waiting until age 70 yields the highest monthly benefit. But does that mean you should always wait? If you do, you miss a bunch of payments.

Here’s what the cumulative benefit (including a modest cost of living adjustment) would be at age 80 assuming benefits start at 62, 67 or 70.ii

Start at Age 62: 647,941
Start at Age 67: 683,940
Start at Age 70: 612,427

So, now it appears that delaying doesn’t add up. Here again, the number don’t lie. But they don’t tell the whole story.

What Other Variables are There?

The first thing to think about is how this decision might affect your spouse.

If you collect Social Security before FRA, your spouse’s survival payout will be reduced. Under normal circumstances a survivor receives half of what the spouse got. If you start at age 62, the normal survival benefit (50%) will be further reduced by nearly a third.

Then there’s the question about what you’ll be doing between age 62 and age 67. If you keep working your benefit may be reduced based on your earnings. If you make more than $19,560, then every $2.00 over that amount will reduce your Social Security benefit by $1.00.iii

If you make $50,000, then your benefit will be reduced by $15,220 (50,000 – 19,560 = 30,440 ÷ 2).

Then, there’s the real big one. What if you live longer?

The longer you live, the cumulative benefit of waiting until 70 will ultimately yield more to you than either of the two earlier start dates. But it may take a while. Here’s what that looks like at age 91:

Start at Age 62: 1,150,835
Start at Age 67: 1,371,409
Start at Age 70: 1,373,903

Now, missing from this whole discussion are a couple big wildcards: your other sources of income and taxes.

Just as it’s possible to model your cumulative Social Security benefit, it’s also possible to calculate your total tax burden in retirement. Your tax advisor and a financial planner can help you arrive at the optimal mix.

And finally, you definitely need to take your personal situation into consideration. Your health and other personal circumstances are much more important than the mathematics behind the decision of when to take benefits. Having a solid retirement plan in place will also help.

Use our Retirement Planner Calculator to see how Social Security fits into your broader retirement plan. Or contact us at (800) 235-8396. We’re available Monday through Friday, 7:30am to 8:00pm (CT).


i Source: Social Security Administration website: Benefit Examples For Workers With Maximum-Taxable Earnings.
ii We’re assuming 2.00%. The average COLA since 1975 is 3.68%. Source: Social Security Administration website: Latest Cost-Of-Living Adjustment.
iii In the year you reach FRA, benefits get reduced by $1 for every $3 you earn above a different limit. In 2022, the earnings limit is $51,960.

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