When do I start drawing Social Security?


Many Americans work with dreams of a comfortable retirement. We pay 6.2% of our wages into the Social Security system and our employers match another 6.2%. So when do we start reaping our rewards?

You can start receiving retirement benefits on your 62nd birthday. However, every year you delay your Social Security benefit payment, you will get an 8% increase in benefits up until age 70.

There are some questions you need to ask yourself and your financial and tax advisor. There are good arguments that support early receipt and good arguments that support waiting until age 70.

Social Security benefits are not intended to be your only source of income when you retire. According to the Social Security Administration, Social Security benefits will replace about 40 percent of your annual pre-retirement earnings. You will need other savings, investments, pensions, or retirement accounts to make sure you have enough money to live comfortably when you retire.

  1. What is my life expectancy? -- If you have a chronic health condition that could shorten your life expectancy, or if anyone in your immediate family has passed away before reaching the average life expectancy (just under 79 years), then claiming your benefit early might be a smart way to maximize what you’ll be paid over your lifetime.
  2. What are my sources of income? -- Sometimes we may have little choice but to claim Social Security benefits early. If you are unemployed and have no other sources of retirement income, it might be in your best interest to claim Social Security benefits early and secure an income stream that’ll allow you to pay your bills.
  3. Am I subject to the retirement earnings test? -- If you are working and drawing benefits, some or all of your benefits could be withheld until you reach your full retirement age.  Social Security's earnings test applies to people who are younger than full retirement age (between 66 and 67). The earnings limit changes every year based on changes to Social Security's average wage index.  In 2018, the amounts were $17,040 from age 62 to the year prior to reaching full retirement age and $45,360 in the year you reach full retirement age. Any earnings in the month you reach full retirement age or after don't count toward the earnings test.
  4. How much debt do I have? –Consumer Financial Protection Bureau data from 2014 shows 30% of homeowners aged 65 and up that were carrying mortgage debt. The Government Accountability Office reported in December 2016, student loan borrowers aged 65 and up owe $22 billion.
  5. Do I need Social Security to pay daily expenses? -- Claiming Social Security benefits early might make sense is if you’ve done a good job of saving for retirement and you don’t need the income provided by the program to make ends meet. By claiming early and reducing your monthly payout, you can lower your annual federal (and possibly state) income tax bill.
  6. How are my investments doing? -- Claiming Social Security benefits early might also make sense if you believe that you can consistently outpace the 8% return you’d receive each year by holding off on your claim between ages 62 and 70.
  7. If I am married, what is my spouses’ benefits? -- Ideally, you and your spouse are going to work out a plan to maximize what you’ll receive from the program over your lifetime. Can you let the larger payout accrue ay 8% per year to make a bigger difference down the line?  By claiming benefits early, the lower-earning spouse ensures that the couple is generating at least some income during retirement.
  8. What do I think Congress will do? -- OK, this is a slightly unfair question. The Social Security Board of Trustees projects the program will be out of cash in 2034. Taking Social Security early could make sense if you foresee trouble ahead for the program and have little faith in lawmakers’ ability to fix it.