Tips for Knowing the Right Time to Begin Collecting Social Security Benefits

By Jonathan Peterson

Copyright © 2015 AARP

Selecting the right time to begin Social Security benefits is a personal matter. Only you know what makes sense for your family. But you should keep in mind some key points when you make this critical choice:

[Credit: ©iStockphoto.com/larryhw]

Credit: ©iStockphoto.com/larryhw
  • Make sure that you know when you qualify for full benefits.

  • Know your benefit. By using the Social Security retirement calculators, you can quickly get an idea of the benefit you’d receive before, at, and after your full retirement age. Each year you wait to collect beyond your full retirement age will add 8 percent to your benefit. Each year you begin collecting before your full retirement age will reduce it between 5 percent and 7 percent. In other words, the earlier you retire, the less Social Security you get each month. For many people, that’s a powerful argument to hold off claiming benefits.

  • Be realistic about your life expectancy. If you don’t like to think about how long you’ll live, get over it. Your life expectancy, and the possibility that you may exceed it, should be factors when you make plans for Social Security and retirement in general. Of course, no one knows how long you’ll live. But there’s plenty to consider:

    • Do people in your family tend to live long?

    • How would you grade your own lifestyle in terms of fitness, exercise, diet, and other personal habits that affect health?

    • How healthy are you? Do you suffer from a chronic condition that is likely to shorten your life?

    • Do you have a lot of stress? If so, do you have ways of managing that stress that make you feel better?

    • Do you lug around a lot of anger and worry? If so, can you do anything about it?

  • Think about all your sources of income and your expenses. Consider your savings, including pensions, 401(k)s, IRAs, and any other investments. Make realistic calculations about how much money you need. Look at several months of statements from your checking account and credit cards to review what you spend on and look for waste, while you’re at it. Ask yourself: Do you have the option to keep on working? Are you physically up to it?

  • Think about your spouse. If you die first, it could determine how much your spouse gets for the rest of his or her life. Consider your spouse’s life expectancy and financial resources. Does he or she have a chance of living for many more years? If so, what are the household finances (beyond Social Security) to support a long life? Does the spouse have health issues that could cost a lot of money in the future?

    Husbands should bear in mind that wives typically outlast them by several years, because wives are typically a few years younger and because women have a longer life expectancy than men. Is that the case in your marriage?

  • Talk it out if necessary. Couples should discuss this topic together, even though, in many marriages, one person may be the one who makes most of the financial decisions. You also may want to discuss your finances with a financial planner, especially if you’ve built up a nest egg and you have questions about how Social Security income will fit in.

  • Be clear on the trade‐offs. You can choose between a smaller amount sooner or a bigger amount later. Your decision about when to start retirement benefits will affect your family income for the rest of your life.