For most healthy people who have other sources of retirement income, it probably pays to wait as long as possible to start taking your Social Security benefits. “There is a sizable difference if you can wait,” says Celandra Deane-Bess, CFP®, Wealth Director, PNC Wealth Management® of Washington DC and Bethesda, Maryland. "But waiting isn’t for everyone."
According to Deane-Bess, the decision on when to take your Social Security benefits requires analyzing many factors, including your current assets, sources of retirement income, and overall state of health.
The earliest you can start drawing on your benefits is age 62 and the latest you should wait is age 70, since there is no advantage to waiting longer. As a middle ground, you can begin to draw at your full retirement age, which is either 66 or 67, depending on when you were born. Consider these three options on when to file your claim for Social Security benefits.
Start at age 62:
When you begin taking your Social Security benefits at age 62, you’re agreeing to accept a lower monthly payment for the rest of your life than if you waited until full retirement age or later. “Sometimes there are good reasons for taking Social Security early,” says Deane-Bess, “especially if you believe you may not live to your average life expectancy.”
Indeed, taking your benefits now can allow you to preserve more of your assets in case you need them for medical expenses down the road, or to provide more for your loved ones after you’re gone.
Wait until full retirement age:
Full retirement age, which is when you can receive your full – or unreduced – Social Security benefits, used to be 65 for everyone. Now, it’s age 66 for people born between 1943 and 1954. If you were born from 1955 to 1959, it’s somewhere between ages 66 and 67. If your birth year is 1960 or later, your full retirement age is 67.
“At the very least, we recommend people wait until full retirement age so they receive their full benefit,” says Deane-Bess.
Once again, a person’s health may factor into the decision. If they fear falling short of average life expectancy, they may choose to take Social Security now, as opposed to drawing on their investments to make ends meet.
Even if you don’t need Social Security benefits to maintain your desired lifestyle, it still might be prudent to elect to receive benefits as soon as full retirement age is reached, she adds. “In that scenario, you could simply invest your benefits with the goal of letting them grow.”
Wait until age 70:
According to Deane-Bess, you should weigh the risks and rewards of deferring benefits until age 70. “The longer you wait, the higher your benefit,” she says. Indeed, your Social Security payment will continue to rise by a certain percentage, depending on your birth date, for every year you wait past your full retirement age. Once you reach 70, however, that bump in benefits ends, so you gain no advantage by delaying any longer.
“That income boost may be worth waiting for, especially if you’re in good health and if you can live off alternative means of income for a while longer,” says Deane-Bess.
Those higher payments come in handy if you live longer than you expect.
What's your next move?
Clearly, these are important decisions that can be made with the support of your PNC Wealth Management team. Deane-Bess says, “If nothing else, if you’re nearing or at retirement, it’s a great opportunity to have a conversation with your PNC Wealth Strategist—and take a fresh look at your income strategy.”
To wait or not to wait?
Consider taking benefits earlier if...
- You don’t expect to reach your average life expectancy and want to preserve your assets.
- You earn less than your spouse.
- You need Social Security to make ends meet.
Consider waiting to take benefits if...
- You are in good health and expect to meet or exceed your average life expectancy.
- You earn more than your spouse.
- You are still working and/or have other sources of retirement income.