Dear Rusty: I will be 64 in May of this year, and I’d like to know the best time to claim Social Security. Signed: Anxious to Retire
Dear Anxious: First, please understand that there is no one “best time” to claim your Social Security benefit, because when you should claim depends upon several factors, such as:
• Your current health
• Your life expectancy
• Your immediate financial need
• Whether you are married
• Whether you are still working
When you should claim also depends upon your personal benefit goals. For example, if you wish to maximize your monthly SS benefit amount you can best do that by simply waiting until age 70 to claim. For each full year you delay past your full retirement age (FRA), your SS benefit will grow by 8%, up to age 70 when you get the maximum you’re entitled to. If you are married and die first, that will also provide your widow with a higher benefit as your survivor if your wife’s own benefit is less than yours. But waiting until age 70 to maximize isn’t for everyone.
If you are in poor health and don’t expect to enjoy at least average longevity (about 84 for a man your age now), then claiming earlier would be prudent. But claiming earlier also means a smaller benefit. Your full retirement age (FRA) is when you get 100% of the benefit you’ve earned from a lifetime of working. Your FRA is 66 ½ and if you wait longer than that you will earn Delayed Retirement Credits (DRCs) of .667% for each full month you delay. That means that if you delay until 70, your SS benefit will be 28% more than it would be at your FRA. But if you claim before you have reached your FRA, your benefit amount will be permanently reduced by .556% for each full month earlier than your FRA that you claim. If, for example, you claim your SS to start at age 64, your benefit will be cut by about 17% from what you’d get by waiting until your FRA to claim. And, if you are married, that smaller benefit is what your widow’s survivor benefit would be based upon if you die first.
Anytime SS benefits are claimed before you have reached your full retirement age, you are subject to Social Security’s “earnings test” which, if you are working, limits how much you can earn before SS ...
