When Should I Claim Social Security?
By: Brian Seay, CFA
We’re diving deep into one of the most important—and often misunderstood—pillars of retirement planning: Social Security.
Whether you’re a few years from retirement or already mapping out your retirement income strategy, understanding how Social Security works—and how to optimize it—can make a six-figure difference over your lifetime. We’ll cover everything from when to claim to spousal benefits to tax implications. You can watch below or listen to the podcast feed. Let’s dive in.
Here are the key takeaways:
Understanding Claiming Ages
You can claim benefits as early as age 62, but doing so results in a permanent reduction—up to 30%. Most people will claim at Full Retirement Age (FRA), which is 67 for most people retiring today, OR delay receiving benefits until age 70. Delaying can increase your monthly payout by up to 32%.
Spousal Strategies
A nonworking or lower-earning spouse may be eligible for up to 50% of the higher earner’s FRA benefit. Sometimes it makes sense for spouses to claim at different times. You should coordinate when each spouse claims to optimize cash flow, minimize taxes and increase survivor benefits.
Tax Implications
While the recent OBBBA tax bill from the summer gave seniors a larger standard deduction, it did not change the tax rules for social security. That means up to 85% of Social Security benefits may be taxable depending on your income. Minimizing taxes in retirement requires advance planning! Delaying benefits may enable you to lower your taxable income early in retirement, which provides headroom for ROTH conversions and other strategies. You need to view your social security claiming decision through the lens of your entire financial plan.
Final Thoughts
Timing your Social Security claim is unique for everyone. It depends on your health, income needs, marital status, goals, assets and tax situation. If you'd like help analyzing your Social Security options or building a personalized claiming strategy, we're here to support you. Watch the podcast for more!