When Should You Take Social Security? What to Consider Before Claiming Your Benefits
When Should You Start Taking Social Security?
For many people approaching retirement, one of the biggest questions is deceptively simple:
When should I take Social Security?
You can begin thinking about Social Security as a simple age-based decision - 62, full retirement age, or 70. But as discussed in Episode 8 of The Finance Things in Life, the decision is rarely that simple.
Matt and Anthony of The Pitti Group wealth Management sat down with Democratis Jim Pashalidis, a Registered Social Security Analytst and Medicare professional, to talk through some of the questions that come up most often when people begin planning for retirement.
The biggest takeaway?
There isn't one Social Secuirty strategy that works for everyone.
Taking Social Security Early Isn't Automatically the Right Answer
One of the most ocmmon assumptions is that once you become eligible for Social Security, you should start taking it.
But eligibility doesn't necessarily mean you should claim immediately.
The episode discusses the general relationship between claiming age and beenfits: claiming earlier generally means receiving a lower monthly benefit, while delaying can increase the eventual benefit.
That doesn't mean everyone should wait until 70, either.
Your retirement assets, income needs, employment status, family circumstances, and longevity considerations can all become part of the decision.
The question isn't simply:
"When can I take Social Security?"
It's:
"When does taking Social Security make the most sense within my overall retirement plan?"
Married Couples Have Another Layer to Consider
Social secuirty planning becomes even more complicated when you're married.
The episode explores how spousal benefits can affect a couple's retirement-income strategy and why one spouse's claiming decision can potentailly affect the other spouse.
This is particularly important when there is a significant difference between the spouses' individual earnings histories.
Rather than looking at each person's Social Security benefit independently, couples may benefit from looking at the household's retirement income strategy as a whole.
That can mean asking questions such as:
- What happens if one spouse claims earlier?
- How could one spouse's benefit affect potential spousal benefits?
- What other sources of retirement income are available?
- How does Social Security fit into the couple's broader financial plan?
These are the kinds of questions that can be difficult to answer without looking at the entire picture.
Social Security Benefits After Divorce
Divorce can introduce another layer of complexity.
During the conversation, Jim discusses situations involving divorced individuals and potential benefits based on a former spouse's work history.
For someone who has been married for 10 or more years, understanding how Social Security rules may apply after divorce can be particularly important.
The larger lesson isn't to memorize every Social Security rule.
In fact, Jim repeatedly emphasizes that individual circumstances matter and that even professionals may need to research a specific situation before giving an answer.
That's exactly why individualized planning matters.
Your 35-Year Work History Can Matter
Another important topic discussed in the episode is the role of your earnings history.
Social Security benefits are based in part on your work history, with 35 years playing an important role in the calculation discussed in the episode.
If someone has fewer than 35 years of earnings, years with little or no earnings can affect the overall calculation.
That makes this an important consideration well before retirement.
For younger workers, Social Security can feel like something that's decades away. But understanding your earnings record and keeping track of your projected benefits can help you become more informed about your future.
Create Your Social Security Account Before You Need It
One of the simplest recommendations discussed in the episode is also one of the easiest to put off:
Create your Social Security account and review your information.
You don't have to be approaching retirement to start paying attention.
Understanding what information Social Security has on file and reviewing your projected benefits can give you another piece of the puzzle as you build your retirement plan.
The earlier you understand your potential sources of retirement income, the more time you have to plan around them.
Will Social Security Still Be Around?
Another question that comes up constantly is:
“Will Social Security even be there when I retire?”
The conversation doesn't pretend to have a crystal ball.
Instead, Jim's answer is essentially that we don't know exactly what future changes will look like.
Social Security's future is a legitimate planning consideration, but building a retirement strategy around the assumption that the program will either disappear completely or remain exactly the same may not be the most useful approach.
A better approach may be to ask:
How can I build a retirement plan that doesn't leave me completely dependent on Social Security?
Social Security Should Be Part of Your Retirement Plan, Not Necessarily Your Entire Plan
One of the strongest moments in the conversation comes when the discussion shifts from worrying about Social Security to building financial independence.
If Social Security represents your entire retirement income, changes to the program can feel frightening.
But if Social Security is one component of a larger retirement-income strategy that includes savings, investments, employer retirement plans, pensions or other sources of income, the potential uncertainty becomes less overwhelming.
As the conversation emphasizes, the goal isn't necessarily to predict exactly what will happen decades from now.
The goal is to prepare for multiple possibilities.
The Importance of Planning Early
Jim also shares a personal story about his parents, who immigrated to the United States and worked extensively in the restaurant industry.
Their experience illustrates an important retirement-planning lesson: working hard isn't always enough if you don't understand how the system you're working within affects your future benefits.
That lesson carries forward from one generation to the next.
Today, younger generations have access to more information and more opportunities to plan ahead.
And the earlier you begin, the more options you may have.
You Don't Have to Figure It Out Alone
Perhaps the most consistent message throughout the episode is that you don't need to become a Social Security expert yourself.
There are thousands of rules and countless individual circumstances that can influence retirement decisions.
That doesn't mean you shouldn't educate yourself.
Quite the opposite.
The more informed you are, the better questions you can ask.
And when you're dealing with decisions that could affect decades of retirement income, getting a second opinion or working with a professional who can look at your entire financial picture may be worth considering.
Social Security Is One Piece of the Bigger Picture
The right Social Security strategy isn't necessarily about finding the “perfect” age to claim.
It's about understanding how Social Security fits into your retirement plan.
Your work history is different.
Your family's circumstances are different.
Your retirement savings are different.
Your income needs are different.
And your goals for retirement are different.
That's why retirement planning should be personal, not based on what your neighbor, sibling, friend or coworker decided to do.
Want to Learn More?
If you're approaching retirement and wondering when to claim Social Security - or if you're simply trying to understand how Social Security fits into your long-term financial plan - Episode 8 of The Finance Things in Life is a great place to start.
Watch the full conversation to hear Matt, Anthony, and Jim Pashalidis explore Social Security, Medicare, retirement planning and the importance of making informed decisions.
And if you're unsure about your current plan, remember: getting a second opinion doesn't mean you've made a mistake. It means you're taking your future seriously.
Disclosure: The Pitti Group Wealth Management, LLC (“The Pitti Group”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where The Pitti Group and its representatives are properly licensed or exempt from licensure.
The guest featured in this podcast is not an employee or investment adviser representative of The Pitti Group. The guest's comments regarding Social Security and Medicare reflect the guest's own views and expertise. This podcast is provided for educational and informational purposes only and does not constitute investment advice, and it should not be relied on as such. It should not be considered as individualized investment, financial, tax, legal, Social Security, or Medicare advice. Social Security and Medicare rules are complex, subject to change, and may vary based on individual circumstances. Information regarding Social Security and Medicare should be verified with the applicable government agency or a qualified professional before making any decisions. Any examples, projections, or illustrations discussed are hypothetical and based on assumptions that may not reflect actual results. There is no guarantee that any particular strategy or planning outcome will be achieved.