A Guide to Deciding When to Take Social Security

Summary: Deciding when to claim Social Security significantly impacts your financial future and retirement income. While you can claim anytime at age 62 or later, each age has trade-offs: early claiming reduces payments, while delaying increases benefits. Consider factors like health, financial needs, and retirement plans to make an informed decision.

When it comes to considering what age you want to claim Social Security, timing is everything. The truth is, deciding when to take Social Security can significantly impact your monthly income for life. As retirement nears, you need to understand your options to secure your financial future.

Are you approaching retirement or planning ahead? Let’s explore how to make the best choice for your retirement years and guide you through the complex nature of Social Security timing.

Understanding Social Security Retirement Ages

One of the most common questions we hear is, ‘What is the retirement age for Social Security?’ The answer depends on your birth year. Here’s a simple breakdown¹:

Your full retirement age serves as the foundation for calculating your benefits, regardless of when you choose to claim them. This number is crucial when considering the social security decision at any age.

For more details, download our FREE PDF, ‘What Are My Social Security Options?’

Factors to Consider When Choosing Your Claiming Age

Your decision about when to claim Social Security, whether at 62, 65, 67, or 70 shouldn’t be made in isolation. Instead, it should be part of a comprehensive retirement planning process that takes into account various factors. This chart illustrates the payout percentage for someone who is 67 at full retirement age¹.

As you can see, the age you claim Social Security impacts your payout percentage. That’s why it’s important to balance the following factors when choosing when to claim:

Financial Considerations

Your choice of Social Security age should align with your overall financial picture. Consider your retirement savings, expected expenses, and other income sources. Remember, Social Security typically replaces only about 40% of pre-retirement income and many retirees are left to rely on it for a much larger percentage.

A comprehensive financial assessment should include:

• Current savings and investments
• Pension or other retirement income
• Expected retirement lifestyle costs
• Healthcare expenses beyond Medicare
• Debt obligations
• Inflation expectations
• The possibility of benefit reductions in the future

Health and Longevity Factors

Your health and family history play crucial roles in the social security decision. If you have a history of longevity, waiting until age 90 and receiving delayed retirement credits might be advantageous. However, if you have serious health concerns, claiming earlier could be the better choice.

Consider these health-related factors:

• Current health status and ongoing medical needs
• Family history of longevity
• Lifestyle factors affecting health
• Access to quality healthcare
• Long-term care planning

Social Security and Medicare Coordination

For your optimal retirement plan, it’s important to understand how claiming Social Security at various ages and enrolling in Medicare work together. Claiming Social Security can impact enrollment and how you pay your Medicare Part B premiums, so coordinating the timing is key. Consider working with a financial professional to help you navigate these decisions and determine what is important when making your plan.

Making Your Social Security Decision

The choice of when to claim Social Security is personal and depends on your unique circumstances. As you near retirement, taking a comprehensive approach to your decision is crucial. Consider:

1. Using retirement planning tools and calculators
2. Creating a retirement budget
3. Evaluating different claiming scenarios

Working with a financial professional can help you better understand how Social Security fits into your overall retirement strategy. At Mutual of Omaha, our financial professionals can help you explore your options and can help create a comprehensive plan that aligns with your goals and circumstances.

To learn more about your Social Security options, how to calculate your benefits, how to reduce taxes on your Social Security payments, and more explore our FREE, downloadable PDF – ‘What Are My Social Security Options?’

FAQs

Q1: Can I change my mind after starting Social Security benefits?

Yes, but only within 12 months from when you started receiving benefits. You must also repay all benefits received. You can only do this once in your lifetime.

Q2: How is my Social Security benefit calculated?

To qualify for Social Security retirement benefits, you need to earn at least 40 credits², which typically requires about 10 years of work. You can earn up to four credits each year, with the exact amount of earnings required for a credit updated annually. Your retirement benefit is calculated based on your average indexed monthly earnings (AIME) from your highest 35 years of earnings. If you have fewer than 35 years of earnings, the missing years are counted as zeros, which can lower your benefit amount. In general, working more years and earning higher wages will increase your retirement benefit.

Q3: What happens to my spouse’s benefits if I delay Social Security?

Your spouse must wait until you file to get spousal benefits. But delaying increases potential survivor benefits.

Q4: Will Social Security be enough for retirement?

Social Security usually replaces 40% of pre-retirement income, so additional savings are often necessary. With fewer pensions available, it’s important to build retirement funds through 401(k)s, IRAs, or personal savings. If savings are limited, delaying Social Security benefits until full retirement age or later can boost monthly payments. A financial professional can help you create a plan to maximize your retirement resources.

Footnotes:

¹ ‘What Are My Social Security Options?’

² https://www.ssa.gov/benefits/retirement/planner/credits.html?utm

Disclosures:

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Not all Mutual of Omaha agents are financial advisors.

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