Making Social Security Decisions with Confidence

By Julianne F. Andrews, MBA, CFP®, AIF®

Deciding when to begin taking Social Security can be confusing and overwhelming especially when you consider that once the decision is made, it can be difficult to change and a 12-month time restriction applies. Determining the optimal time to begin taking benefits depends on several factors, including the amount of benefits available to you and your spouse (if married), life expectancy, the date of your retirement, and the availability of other assets and income sources, such as 401(k)s, individual retirement accounts (IRAs) and retirement savings plans, that can be tapped during non-working years.[1]

First, you’ll need to understand the financial impact of taking benefits before your Full Retirement Age (FRA). When FRA became a moving target in 1983, the timing of eligibility was delayed for individuals born after 1954.[2] This chart shows how your birth year drives eligibility.

Full Retirement Age Depends on Birth Year[3]
Year of Birth Full Retirement Age
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+ 67

If you elect to start taking benefits at age 62, in advance of your FRA, your payments will be lower than they could have been had you waited until FRA. [4] However, the amount of reduction decreases each month as you approach your FRA – when breakeven is achieved.

If you are planning to take Social Security payments before your FRA and continue to work,, know that for every $2 you earn over the earnings limit, Social Security will withhold $1. The earnings limit, which is also linked to the recipient’s birth year, can be tricky to calculate because it also depends on the timing of when payments began. Consult your advisor for help in determining how much of your work-related income you can keep post-retirement.

To increase your Social Security benefits, wait until age 70 to begin taking payments. The payment amount increases monthly between your FRA and age 70, essentially allowing you to collect 124% of your Primary Insurance Amount (PIA) through a series of delayed retirement credits (DRCs).[5]

Additional benefits can be paid to spouses and former spouses who meet certain conditions. For example, spouses who are married to a Social Security beneficiary for at least one year, are at least 62 and whose partner is collecting Social Security benefits are eligible to receive up to 50% of their partner’s payments. These payments begin once the claiming partner reaches FRA. In some cases, the one-year requirement can be waived.

The amount of available survivor benefits, on the other hand, depend on when the deceased spouse began receiving benefits. For example, if the deceased spouse opted for payments at age 62, the amount of benefit available to the surviving partner is forever reduced. Deceased spouses who waited to receive the higher payment can pass that amount on to the surviving partner. In some cases, parents and children of deceased Social Security beneficiaries may be eligible to collect survivor payments.

Former spouses who were married to Social Security recipients for at least 10 years and have been divorced for a minimum of two years may be eligible to receive payments if both parties are 62 or older. The former spouse’s earnings history sets the amount of these payments, which are capped at 50% of the former spouse’s benefit. If the former spouse passes away, the surviving former partner may be eligible for survivor benefits. The same eligibility for the former spouse exists if the ex-partner remarries.

With your advisor at your side, about-to-be-retirees who take three key steps can navigate this complex landscape with confidence:

  • Review Social Security options against the context of your entire financial situation, weighing your choices against other income sources.
  • Once you’ve consulted with your advisor and made your choice, make an appointment with your local Social Security Administration office. An in-person offers you a chance to have all your questions answered as they come up – an opportunity not available to those who choose to file for benefits online or via an automated phone-based enrollment system.
  • Expect the rules to change. The last time the Social Security Administration changed its rules of engagement was in 2015. Whenever changes occur, your financial advisor will be current on the changes, so be sure to check with your advisor to determine what effect, if any, rule revisions will have on you and your situation.

The timing and financial impact of deciding when to take Social Security benefits involves multiple twists and turns, making it a path best navigated with expert assistance.


[1] Social Security. (2017). BlackRock. Accessed online March 21, 2017 from https://www.blackrock.com/investing/retirement/social-security
[2] Claiming Social Security at Full Retirement Age. (2017). Oppenheimer Funds. Accessed online March 21, 2017 from https://www.oppenheimerfunds.com/investors/article/claiming-social-security-investors/social-securitys-magical-age-investors
[3] Claiming Social Security at Full Retirement Age. (2017). Oppenheimer Funds. Accessed online March 21, 2017 from https://www.oppenheimerfunds.com/investors/article/claiming-social-security-investors/social-securitys-magical-age-investors
[4] Buckner, G (2015). Filing for Social Security? Choose Your Start Date Carefully. Fox Business. Accessed online March 21, 2017 from http://www.foxbusiness.com/features/2015/01/05/filing-for-social-security-choose-your-start-date-carefully.html
[5] Social Security. BlackRock. Accessed online March 21, 2017 from https://www.blackrock.com/investing/retirement/social-security

*Commonwealth Financial Network is not responsible for the content and does not guarantee the accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.

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