Best Strategy for Claiming Social Security Retirement Income

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A recent study indicates that the typical family loses an average of $111,000 due to poor choices of when to begin taking Social Security retirement benefits.  With Social Security retirement payments making up an average of one-third the average retirees’ income, making the right decision is vital to your financial well-being.

Let’s start with the Social Security ‘bookends’…the earliest and latest you can begin taking your benefits.  The earliest you can start receiving benefits is age 62.  If you do this, your monthly benefit amount will be discounted.  The latest you can postpone taking benefits is age 70.  In between these two dates is your ‘full retirement age’…that age where you can begin receiving full benefits.  For me, that was age 66.  That full retirement age will inch up for younger folks but is an important date to know.  By delaying benefits beyond your full retirement date, your benefit amount rises 8% per year.  So, for example, by waiting until age 70 to begin taking my benefit, my benefit amount bumps up 8% per year for four years for a total of 32%.  What’s important that many people miss is that if I were to predecease my wife, she would take my place and receive my (higher) benefits for the rest of her life.  For this reason, particularly for the family breadwinner (spouse with the highest Social Security earnings record), waiting until age 70 is the best choice with some exceptions:

  • Health considerations. A 65-year-old woman’s life expectancy is 86.  The same age man has a life expectancy of 84.  Note that these are ‘averages.  If you (or your lower-income spouse) have significant health issues, beginning Social Security retirement income earlier may be a better idea than waiting until age 70.
  • Inadequate income. What if your other sources of income are not adequate to fund your retirement expenses?  This one is a bit tricky because it could make sense to ‘spend-down’ some of your assets while postponing taking Social Security until your full retirement age or later.  In other words, the value of your investment accounts may dip during your 60’s and rebound in your 70’s and beyond.

The study suggests that beginning benefits before full retirement age is generally a poor strategy because of the amount of the discounting of the monthly benefit.  One of the best financial strategies is to continue working through your sixties to bridge the income gap until you reach maximum benefits at age 70.  We definitely see a trend in this direction.

Getting this decision right can mean tens of thousands of dollars more money for you and your family.  I strongly urge you to meet with your financial advisor before making this critical decision.

Follow The Welch Group every Tuesday morning on WBRC Fox 6 for the Money Tuesday segment.

Fox6 Talking Points

“Best Time to Begin Social Security”

  • Age 70 is best for most breadwinners
  • Exception: Poor health
  • Exception: Inadequate income
  • Avoid electing ‘early’ benefits
  • Work longer to close the income gap


Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specialize in providing fee-only investment management and financial advice to families throughout the United States.  He is the author or co-author of six books including  J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaire; and 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. For more information, visit The Welch Group . Consult your financial advisor before acting on comments in this article.