Over the years, whether on television shows, articles, and financial sound bites, there has seemed to be a consistent message: claim Social Security as early as possible or wait as long as you possibly can. These two age extremes, 62 and 70, seem to get most of the attention.
But as with many aspects of life, it depends, because life just isn’t that simple.
There are many factors that can and do impact when one should claim Social Security, including your health, whether you are single, married, or widowed, your savings, your taxes, and your long-term goals.
But there is good news: once you know and understand your factors, you can be better equipped to make the choice that supports your long-term goals and well-being.
Why It Can Help to Give More Thought to Social Security
Deciding when to claim Social Security should not just be about replacing income. It is also about coordinating benefits, whether with your spouse if you are married, managing taxes for this year and throughout retirement, and looking ahead many years in the future to protect both you and your loved ones.
Unfortunately, the “62 or 70” soundbite we often hear leaves out the nuances that make us unique. There are many factors beyond one’s age that people sadly overlook.
What Factors Can Influence Your Claiming Age
1. Your Family and Marital Situation
For those who are married, the decision you make about Social Security affects at least two lives, not one. For instance, a higher-earning spouse who delays claiming Social Security may provide more income to the lower-earning spouse, especially if one outlives the other.
Also, and depending on the circumstances, people who are divorced may still have access to divorced-spouse benefits (typically if the marriage lasted at least 10 years and they have not remarried).
2. Health and Longevity Considerations
Social Security claiming calculators can easily tell you the breakeven point, but it should not be the driving decision-maker. Looking at family longevity patterns, your current health, and expectations about the future are important considerations.
There is no correct answer; there is only the answer that works for your actual life.
3. Do You Plan to Keep Working?
Can you claim Social Security before your full retirement age (which ranges from 66 to 67 depending on your birth year) while still working? Yes, but it can create complications. The Social Security earnings test may temporarily reduce your benefits if your income exceeds certain limits (with benefits adjusted once you reach full retirement age).
So, if you plan to earn income in your 60s, make sure you understand the earnings test before claiming Social Security prior to your full retirement age.
The Tax Aspects of Social Security That People Rarely Talk About
Some retirees are surprised when they discover that some of their Social Security benefits will be subject to income tax (up to 85 percent of the benefit, depending on income).
1. Roth Conversion Opportunities
If you retire and delay claiming Social Security for a few years, this could create a brief window of opportunity to move money from traditional Individual Retirement Accounts (IRAs) and 401(k)s into Roth IRAs. Without wage income and without Social Security income, one might find themselves in a lower or much lower tax bracket than they historically have been in.
This is simply an example and not a recommendation.
Read more about Roth Conversions after 60.
2. IRMAA and MAGI Awareness
Medicare Part B and Part D premiums can increase depending on your Modified Adjusted Gross Income (MAGI) (based on your tax return from two years prior). Unlike income tax brackets, one extra dollar can push you into a new income-related monthly adjustment amount (IRMAA) threshold, resulting in a sharp increase in Medicare premiums.
Since Social Security income is part of MAGI, the age at which you claim Social Security, along with other income sources, can impact whether you cross IRMAA thresholds.
3. How Yearly Reviews Help
With tax laws and regulations changing every few years, tax planning is not static. A tax strategy that made sense at 62 may no longer make sense at 67. Reviewing tax brackets, IRMAA thresholds, and distributions from all your accounts each year can help provide financial stability.
Can a Financial Planner Help with Social Security Timing?
With all the moving parts and interactions around Social Security timing, including longevity, taxes, Medicare, withdrawals from accounts, and possibly spousal planning, individuals can find value when working with a qualified financial planner who focuses on long-term, holistic planning (including your estate planning and other long-range considerations).
A good planner does not simply plug numbers into a breakeven calculator and call it done. Instead, they help you review claiming at various ages and the ripple effects over the next 5, 10, and 25 years. They can also help steer you around common pitfalls, such as:
- Claiming early if you are still working.
- Crossing an IRMAA threshold by accident.
- Missing out on low-income tax years.
- Not considering impacts on survivor benefits.
Uncertainty can decrease by talking about your questions and concerns with a professional who listens and takes the time to educate and provide clarity about your options.
Recapping It All
There is no “best” age for everyone to claim Social Security. It should be the age that aligns with your health, your household structure, your income and assets, your taxes, and your long-term goals.
The more clarity you have about these pieces and how they fit together, the more empowered you can feel when making decisions about your future.
A Few Questions to Think About
Before you decide what age to claim your Social Security benefits, consider:
How long do people in your family tend to live, and how does this impact your planning? If you are married, what age to claim benefits would provide the most protection for your spouse over the long term? Will you still be earning income in retirement, and how will that income impact the earnings test? Based on your income, do you know how close you are to a Medicare IRMAA threshold?