When Should You Start Taking Social Security Benefits?


As with many questions about personal finances, the answer is “it depends.”

Initially, several factors should weigh on the decision.

  • Your age
  • Whether you plan on working in retirement
  • Whether you need the income sooner rather than later
  • How long do you expect to live

Your age is a critical factor because it will determine the amount of benefit you are eligible for. Working in retirement is another key factor because it could impact the amount of your benefit. The need for income sooner rather than later is a critical determinate because it can override all other considerations. While we can’t really know how long we will live, you can make some assumptions based on your or your family’s health history. That, too, can be an overriding consideration.

Understanding Social Security Basics

Essentially, your Social Security benefit amount assumes you start receiving benefits at your full retirement age (FRA) and is based on your earnings history during the highest 35 years of earnings. For people born between 1955 and 1959, their FRA is 66 plus two months for every year after 1954. If you were born after 1960, your FRA is 67.

While you can start taking benefits at age 62, your monthly benefit would be permanently reduced by 30%. Each year you wait after age 62, the benefit reduction decreases until it reaches 100% at your FRA.

Retirement Age Benefit Reductions
62 30%
63 25%
64 20%
65 6.7%
66 6.7%

Conversely, you can delay benefits until up to age 70. In doing so, you will receive a Delayed Retirement Credit, which will increase your benefit each year by 8%. That means you can lock in up to a 32% higher benefit for life a depending on when you were born. This chart shows the spectrum of benefit changes based on your full retirement age and when you start taking benefits.

Full Retirement Age Start Taking Benefits at Age
62 63 64 65 66 67 68 69 70
65* -20% -13.3% -6.7% 0% +6.5% +13% +19.5% +26% +32.5%
66 -25% -20% -13.3% -6.7% 0% +8% +16% +24% +32%
67 -30% -25% -20% -13.3% -6.7% 0% +8% +16% +24%

How Continuing to Work Affects Your Benefits

If you start taking benefits before FRA while continuing to work, your benefits will be reduced. For the years before reaching FRA, your benefits will be reduced by $1 for every $2 earned above $18,960 (in 2021). If you are still working during the calendar year you reach FRA, your benefit is reduced by $1 for every $3 earned above $50,520 until you reach your FRA. When you reach FRA, your benefit amount is adjusted upwards to reflect the number of months benefits were reduced.

Why You Should Take Early Benefits

The primary reason anyone should consider taking early benefits is if they need the income. Maybe you were laid off from work. Or you just need the extra income. If your options for generating the income you need at that moment are limited, taking early benefits may be your only option.

The other reason to take early benefits is if you don’t expect to live to life expectancy. If you start taking benefits at age 62, even at a 30% reduction, your total benefits received would be equal to or higher than if you started benefits at FRA. As the chart below shows, total benefits received beginning at age 62 would be higher if you don’t live past age 70 or 75, and they would be roughly equal at age 80. It’s not until after age 83 that your total benefit amount would be less.

  Total Lifetime Benefits
  Begin at age 62

$750 monthly benefit

Begin at age 66

$1,000 monthly benefit

Begin at age 70

$1,320 monthly benefit

Live to 70 $72,000 $48,000 0
Live to 75 $117,000 $108,000 $79,200
Live to 80 $162,000 $168,000 $158,400
Live to 83 (life expectancy) $189,000 $204,000 $205,920
Live to 85 $207,000 $228,000 $237,600
Live to 90 $252,000 $288,000 $316,800

Why You Should Delay Benefits

If you have saved sufficiently for retirement and have the income to meet your living expenses, you can allow your benefit to grow by 8% per year. If you expect to live beyond life expectancy, you will maximize your total lifetime benefit. As you can see, the total lifetime benefit received at life expectancy is about the same whether your started at FRA or age 70.

Final Thoughts

When you start taking your Social Security benefits is a personal decision based on your circumstances, but it’s essential to thoroughly understand your options and their implications. Here is a summary of the key considerations for when to take Social Security benefits

  • There is a significant, permanent reduction in benefits if you start them at age 62.
  • If you need the extra income to meet living expenses, consider claiming your benefit early.
  • If your health is deteriorating, consider claiming benefits early.
  • If you expect to live to life expectancy, there is little difference between lifetime benefits starting at FRA and age 70.
  • If you have sufficient income from other sources and expect to live beyond life expectancy, consider delaying benefits until age 70.