Deciding when to start your Social Security benefits is one of the most important financial decisions you'll make for retirement. While there are three main choices, many people find that their full retirement age offers the best balance. Let's explore some pros and cons of taking benefits early, waiting until your full retirement age, and delaying until age 70.
Starting Benefits Early (as early as age 62)
The biggest advantage of taking Social Security benefits early is simply getting money sooner. If you need cash flow to cover living expenses or want to stop working, this option provides it.
However, the major downside is a permanently reduced monthly benefit. Social Security permanently reduces your benefit for each month you start before your full retirement age. For example, if you were born in 1960 or later, your full retirement age is 67. If you start benefits at your earliest age which is 62, your monthly benefit would be about 30% less than your full benefit. This reduction applies for the rest of your life.
Taking Benefits at Your Full Retirement Age (The Preferential Choice)
For many, full retirement age (FRA) is the most prudent and sensible time to start benefits. Your FRA is determined by your birth year and is between ages 66 and 67. The key advantage here is that you get your full, unreduced benefit. This is the age where your benefit is worth 100% of what you've earned, and you can start getting that money without any permanent reduction. It’s a great way to secure a steady income at an age that feels right for many people.
Delaying Benefits Until Age 70 (A Risky Decision)
While delaying benefits until age 70 offers the largest possible monthly payment due to "delayed retirement credits," it comes with a major caveat: you don't know how long you will live. These credits stop accumulating at age 70, but if you do not live long enough to collect benefits for a significant number of years, you may not make up for the benefits you missed out on by waiting. It's important to remember that Social Security benefits are not an asset you can leave to your heirs, so any benefits you don't collect are simply gone.
What About Spousal Benefits?
Your decision may also affect your spouse. A spouse may be eligible for a benefit of up to 50% of your full retirement benefit. If you, the higher earner, take your benefits early, it permanently reduces the amount your surviving spouse will receive if you pass away first. Delaying your benefits to age 70 ensures the highest possible survivor benefit, but claiming at your full retirement age also provides a strong base for your spouse without the gamble of waiting.
Earning While Receiving Benefits
If you are still working and decide to start your benefits before your full retirement age, your earnings may temporarily reduce your Social Security payments. In 2025, if you are under your full retirement age all year, Social Security will deduct $1 from your benefits for every $2 you earn above an annual limit ($23,400 in 2025). In the year you reach your full retirement age, the limit is higher ($62,160 in 2025), and the deduction is $1 for every $3 you earn. However, once you reach your full retirement age, there is no limit on how much you can earn. Social Security will also recalculate your benefit amount at your FRA to give you credit for any months where benefits were withheld due to your earnings.
In summary, choosing when to take your benefits is a personal calculation. Many things need to be considered before making a decision. Some were mentioned earlier, and here are a few more to consider. Are you still working? How much do you earn? How's your health? Taking them early provides money now, but with a permanent reduction. Waiting until your full retirement age offers your full benefit without the permanent reduction. For many, this is the most secure and reasonable choice as it allows you to continue to work and earn any amount without a reduction in social security benefits. While delaying to age 70 offers a larger monthly check, it comes with the risk that you may not live long enough to make it worthwhile. Are you unsure and want someone to talk with about it, just give our office a call.