For most retirees, Social Security is the cornerstone of a stable retirement. But maximizing benefits isn’t as simple as just picking an age and filing. You can and should time your claim strategically — otherwise, you could leave money on the table, from a couple of perspectives.
First, the timing of your claim impacts your monthly benefit. If, for instance, you claim Social Security at 62 instead of your official retirement age (more on that soon), your monthly benefit could be permanently reduced by as much as 30%. On the other hand, delaying until 70 could increase your total lifetime benefits by over $100,000, especially for married couples who coordinate spousal benefits.
The second perspective is what retirees usually overlook. Filing for Social Security affects not only the size of your benefit but also the rest of your wealth. The decision impacts:
- How much you rely on your investment portfolio
- The taxation of withdrawals from other accounts
- How much of your money stays invested and continues growing
In short, this is a multifaceted decision — one that we’ll unpack throughout this article. But before diving in, a simple two-step assessment can help guide you in the right direction.
- Step one: Estimate your monthly expenses.
- Step two: To cover this estimate, would you have to withdraw more than 5% of your retirement portfolio annually?
- If your withdrawal rate exceeds 5%, claiming Social Security earlier may be necessary to preserve the longevity of your portfolio. Otherwise, you may need an alternative income source (e.g., part-time work or rental income) to give your retirement assets the “breathing room” they need to endure.
- If you can afford to wait, delaying Social Security until closer to 70 is usually the best move. But many retirees can’t afford to delay without spending down too much of their savings. In that case, for married couples it’s often best to claim the smallest available benefit first while deferring the largest benefit until age 70.
With this in mind, let’s explore the ins and outs of one of the most powerful tools in your retirement plan. In this article, we’ll walk through how Social Security works, the impact of early vs. delayed claiming, and how to optimize your benefits for a long, comfortable retirement.
Making the Most of Social Security
Social Security is a retirement planning staple. Roughly 50% of Americans rely on Social Security for at least half of their household income, while 92% count on Social Security for at least some financial support.
What makes Social Security benefits so dependable?
- Benefits are guaranteed to last for life.
- Benefits are protected against inflation through automatic cost-of-living adjustments (COLAs).
Although Social Security is a reliable, stable source of funds, you should still be strategic about when you claim benefits because the age you file directly impacts your monthly payment. To help you choose the optimal time, let’s walk through your “full retirement age.”
Understanding Your Full Retirement Age
Your full retirement age (FRA) is the age when you can qualify for your standard Social Security benefit, also known as your primary insurance amount (PIA). This is calculated based on your highest 35 years of inflation-adjusted earnings.
When you choose to claim Social Security before or after your FRA, your monthly benefit is either reduced or increased accordingly. In other words, your FRA is the benchmark. Claim before it, and your benefit lessens. Delay your claim, and your benefit grows.
So, when is your FRA? It depends on when you were born:
| Birth Year | Full Retirement Age |
| 1942 or earlier | 65 |
| 1943–1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
For anyone born in 1960 or later, 67 is the standard FRA — a change implemented by Congress in 1983 to shore up Social Security’s finances and adjust for longer life expectancies.
Knowing your FRA helps you determine your personal “standard” benefit, however, your claiming age will ultimately define your retirement income. In the next section, we’ll explore how early filing penalties and delayed retirement credits impact your benefits, so you can make the most informed decision possible.
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Tip: You can use this Social Security calculator to estimate your monthly benefits, or create an account on the Social Security website to see your current projected amount. |
How Early Filing Penalties and Delayed Retirement Credits Affect Your Benefits
Social Security lets you choose when to start receiving benefits, anytime between age 62 and 70. That flexibility comes with a tradeoff — the earlier you claim, the smaller your monthly check.
Why? Social Security is designed to equalize benefits over your lifetime no matter when you claim them. So, if you claim early, your monthly amount is reduced to account for a longer payout period. On the other hand, delaying benefits past your FRA rewards you with delayed retirement credits, which boost your payments for life.
Compared to your FRA:
- Claiming at 62 could mean up to a 30% reduction in benefits.
- Claiming at 70 could increase your benefits by up to 24%.
Source: Social Security Administration, “Starting Your Retirement Benefits Early”
These are just the endpoints of the claiming window. To illustrate the impact of filing at different ages, let’s assume your FRA is 67.
| If you claim benefits at age: | This is how much your benefit would be reduced |
| 62 | 30% |
| 63 | 25% |
| 64 | 20% |
| 65 | 13.3% |
| 66 | 6.7% |
| If you claim benefits at age: | This is how much your benefit would be reduced |
| 67 | 0% |
| 68 | 8% |
| 69 | 16% |
| 70 | 24% |
At first glance, delaying benefits seems like an obvious choice. Who wouldn’t want a bigger check? Maximizing your payout isn’t the sole purpose of timing your claim though. There are other financial variables at play.
Early vs. Delayed Claiming: What’s the Right Move?
It’s not an easy decision. Depending on your lifestyle, health, and goals, you may need the money sooner, so when you file should factor into your overall retirement strategy. Here are a few things to consider:
| When Claiming Early (Before FRA) Might Make Sense | |
| You need the income now | If you’ve retired early and don’t have enough savings, claiming at 62 or 63 may be necessary to cover expenses. |
| Your spouse has a higher benefit | If your spouse is the higher earner, you may be better off claiming early and later switching to spousal benefits. |
| You have health concerns | If you have a shorter life expectancy, delaying benefits may not be beneficial. |
| You don’t need Social Security right away | If you have adequate retirement funds or other sources of income, delaying your claim can lock in higher benefits for later years. |
| You’re married and the higher earner | Delaying your claim can increase survivor benefits for your spouse if they outlive you. |
| You have a long life expectancy | The longer you live, the more you benefit from higher monthly payments. |
Longevity is one of the biggest variables in retirement planning, and Social Security benefits are designed to mitigate the risk of outliving your money.
For most retirees, delaying until age 70 results in the highest total lifetime benefits, especially for the higher-earning spouse. A 2023 analysis found that delaying Social Security to 70 could increase a couple’s lifetime income by over $110,000.
However, retirement isn’t a one-size-fits-all experience. The “best” claiming strategy depends on your specific circumstances, and in the next section, we’ll explore how spousal and survivor benefits impact this decision.
The Role of Spousal and Survivor Benefits
You and your spouse have made plenty of big decisions together. When to retire and how to claim Social Security should be no different. Coordinating claims strategically can unlock tens of thousands of dollars in benefits over your and your spouse’s lifetimes. That’s because you also have access to spousal benefits and survivor benefits if you’re married or were married for at least 10 years.
Spousal benefits allow lower-earning spouses to receive up to 50% of the higher earner’s benefit. Here’s a high-level example:
| If your own benefit is: | And your spouse’s benefit is: | Your spousal benefit would be as much as: |
| $1,200 per month | $3,000 per month | $1,500 per month
(50% of spouse’s benefit) |
| $1,600 per month | $3,000 per month | $1,600
(because your benefit is higher than 50% of spouse’s benefit) |
Important Note:
- You cannot claim spousal benefits until the higher-earning spouse has filed for their own benefits.
- Claiming spousal benefits before your full retirement age results in a permanent reduction.
Survivor benefits allow widows and widowers to receive up to 100% of a deceased spouse’s benefit, but the amount depends on when the deceased spouse originally claimed their benefits.
- If the deceased spouse claimed early (before FRA), the survivor benefit will be lower.
- If the deceased spouse waited until 70 to claim, the survivor will inherit a higher benefit for life.
This is why, in many cases, it makes sense for the higher earner to delay benefits until age 70, to help guarantee the surviving spouse has the highest possible lifetime income. Because of these complexities, married couples should consider working with a wealth advisor to create a personalized claiming plan — especially if one spouse out-earns the other.
The Bigger Picture: How Social Security Affects the Rest of Your Wealth
Many retirees approach Social Security with one question in mind: “What’s my break-even point?”
But Social Security doesn’t exist in a vacuum — claiming influences the rest of your financial plan, namely your portfolio withdrawals and overall tax liability. Consider the broader consequences of claiming as early as possible versus delaying until 70.
Scenario A: Claiming Social Security Early
If you claim Social Security at 62, you’ll reduce monthly benefits but limit your portfolio withdrawals, which extends the runway for investment growth.
In turn, this means your retirement account balance could be much larger by the time you turn 75, when the IRS forces you to take requirement minimum distributions (RMDs). Those RMDs could push you into a higher tax bracket and potentially increase your tax liability.
Scenario B: Delaying Social Security
If you delay Social Security until 70, you’ll help maximize your monthly benefits, but you’ll likely withdraw more from your portfolio in your 60s to cover living expenses.
Consequently, you’d need to be disciplined and calculated with your withdrawal rate.
While this may seem counterintuitive, delaying (and relying more on your portfolio) reduces your future RMD burden and may allow you to convert funds into a Roth IRA at lower tax rates. This strategy could lower your tax liability later in retirement and give you more flexibility.
Generally, the second scenario is the most advantageous, if doable, but it has its own set of variables to account for — one of which is portfolio withdrawals. More on those momentarily.
Key Takeaways
- Timing your claim is crucial. Filing early reduces your benefit for life, while delaying until 70 can significantly increase your monthly and lifetime income.
- Full retirement age is your baseline. Claiming before or after FRA directly impacts your benefit amount, with reductions as severe as 30% for early filers and increases up to 24% for delayed claimers.
- Spousal and survivor benefits add complexity. Coordinating benefits with your spouse can maximize lifetime income, especially when there’s a significant earning disparity.
- Social Security alone likely won’t fund your retirement. While Social Security is a stable source of income, it’s probably going to supplement your investment and withdrawal strategy.
- Maximizing Social Security requires planning. Claiming strategies should account for longevity, tax implications, and overall financial goals.
Social Security is complicated (and, admittedly, a dry topic), but it’s integral to retirement planning and, with the right approach, can serve as a reliable source of income.
