Social Security - When Should I Take It? — Financial Planning Solutions, LLC

Should You Take Social Security at 62 or Wait Until 70?

When it comes to Social Security, there’s no one-size-fits-all answer. Some people take it at 62 (Generally, this is the earliest one can collect). Others wait until 70 to maximize their benefit. And then there are special considerations if you’re divorced or widowed.

Here are three examples of actual conversations I had this year with people that started taking a closer look at their finances.

Scenario 1: Monica, Age 65, Single

Monica: “My brother-in-law told me I should start Social Security now”.

Rick: “Well, you are eligible to start Social Security now, but if you wait until your full retirement age of 67 for you—you’ll not only receive more but you also won’t run afoul of the earnings test. And, if you hold out until 70, you could get roughly 24% more than starting today.”

Monica: “Wait. What is the earnings test?

Rick: “This year, if one earns more than $23,400, Social Security can take back $1.00 of benefit for every $2 earned above this limit. Based on your income of 97k, you would likely not receive a Social Security benefit.

Monica: “So, I can’t really collect a benefit if I’m still working before age 67? Should I collect then?”

Rick: “It’s a bit hard to say for sure. At your full retirement age (in Social Security’s eyes) of 67, you would not be subject to the earnings test BUT, there can be other reasons to start sooner than age 70 but I would need to understand your entire financial picture.

You might still want to take it at 67 if:

You need the income now to cover expenses and have little in other assets
You’re concerned about your life expectancy
You want to invest the money rather than leave it in the government’s hands

But if you can wait, delaying means locking in a higher guaranteed monthly check for life, and it’s inflation-adjusted. Since you’re in good health and have other income, you might consider holding off.” See the graph below of Monica’s benefit options that she shared with me….

Scenario 2: Gary, 62, and Trish, 68, Married – Gary is not employed

Gary: “I’m not working and feel I could use some extra income”.

Rick: “Gary, if you take Social Security now, you’ll lock in a smaller benefit for life. But since Trish is already 68, she could be getting her own benefit—or if her benefit is higher, Gary, you might take a spousal benefit instead. Bear in mind, Gary, you cannot collect a benefit on Trish’s work record unless she has also started collecting”

Gary: “So should we both delay?”

Rick: “Not necessarily. Sometimes one spouse takes theirs early, so the couple has income, while the higher earner (Trish) delays maximizing the survivor benefit later. Remember—when one of you passes, the surviving spouse keeps the higher of the two benefits, not both. That’s why it can make sense for the higher-earning spouse to wait until 70. Once I have a better understanding of your overall finances, we can determine the right strategy for you”

Scenario 3: Ruth, 64, Widow

Rick: “Ruth, because you’re widowed, you have another option—survivor benefits. You could start your survivor benefit now and then switch to your own retirement benefit later, or the other way around.”

Ruth: “So I’m not stuck with just one choice?”

Rick: “Exactly. If your survivor benefit is larger now, you might take that and let your own benefit grow until 70. Or, if your own benefit will be bigger at 70, you might start with survivor benefits first. The flexibility can really work in your favor. However, since you are still working and earning well over the earnings test limit, this strategy works best to wait until your full retirement age of 67.

Here's an example of how it could look:

Let’s say you begin collecting a widowed benefit when you are 67 and that amount is $3,000 a month. You do this until you turn 70 and over these three years have collected $108,000 (not including inflation adjustments $3,000 x 12 months x 3 years). Then at 70, you switch to your own benefit and start collecting $3,900 a month. This strategy gives you an extra 108k you otherwise might not have received if you had waited to age 70 to collect.

Key Takeaways

Taking Social Security early (as soon as 62): More years of payments, but a lower monthly amount for life.

Delaying until 70: Fewer years of payments, but a much larger monthly check.

If divorced: You may qualify for benefits on your ex-spouse’s record if you were married at least 10 years, are currently unmarried, and meet other requirements.

If widowed: Survivor benefits can be taken as early as 60 (or 50 if disabled), and you may choose between survivor and your own benefit to maximize income.

Rick’s Final Advice: “It’s not just about the math—it’s about your health, your income needs, and your goals. We can help you make the right decision”

Have questions or something I may be able to help you figure out, schedule a quick complimentary call with me by clicking HERE to see my online calendar.

About the author: Rick Fingerman, CFP, CDFA, CCPS

Rick Fingerman, CFP®, CDFA®, CCPS®, is a founding and managing partner at Financial Planning Solutions, LLC. He has been helping individuals and families make sound financial decisions for over 30 years. Rick has been featured in The Wall Street Journal, Retirement Daily, Investment News, The Boston Globe, Investopedia, Financial Advisor Magazine, Financial Experts Network, and the Chicago Tribune.

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Know someone that recently loss a spouse? Here is an article that may be of interest.....The Loss of a Spouse

All the best.

Rick Fingerman, CFP®, CDFA™, CCPS®

617-630-4978

Rick@PlanWithFPS.com

Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.