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It's a big decision, deciding when to take Social Security

Social Security Timing – Getting it Right!

One of the most critically important components of millions of Americans’ retirement plans is an 85-year-old government entitlement program called Social Security. In 1998, 59 percent of Fortune 500 companies offered a defined benefit, or pension plan, but by 2015, that number was down to 20 percent and dropping. For many retirees, Social Security is the only defined benefit plan they have, making up over half of their retirement income.

How much Social Security are you eligible for?

A quick primer on Social Security is that—be eligible for it—you need to earn 40 credits over the course of your working career. In 2020, for every $1410 you earn in the year, you get one credit, up to a maximum of four credits in one year. The amount you are eligible to be paid is based on the average amount of money you earn (adjusted for inflation) over the highest 35 income years of your working career. Social Security is paid out as four different types of benefits:

  • Retirement, which is taken at age 62 and over for eligible workers
  • Survivor benefits to a spouse or minor child
  • Disability benefits to those under retirement age but eligible under Social Security guidelines
  • Family benefits to the spouse (both former and current), and minor children of an eligible recipient.

Big Decision: When should you begin taking Social Security?

One of the biggest retirement decisions when is the question of when to take Social Security. At age 62, eligible workers can begin to take retirement, but at a greatly reduced rate than what they would earn at Full Retirement Age (FRA). This age for people born after 1960 is 67 (FRA goes down for people born earlier; 66 is the FRA for people born between 1943 and 1954).

The payment you are eligible for, called the Primary Insurance Amount, or PIA, goes up about eight percent each year that we wait to take Social Security over our FRA (up to age 70), but if you take Social Security at 62, which is 5 years early for most people approaching retirement, you could expect a permanent 30% reduction in monthly PIA over the course of retirement. These same rules apply to your spouse if they are eligible for a spousal benefit, which is generally half of the primary earner’s benefit. (Spousal benefits only apply to those who’s Social Security PIA is less than half of their spouse’s).

How to get your personal account (and useful planning calculators)

If you have not done so, I would recommend that you sign up for your personal online account on Here you will find out the best estimates for what your PIA will be at different ages, and there are also useful calculators that help you determine how much you and your spouse can make at different ages.

If you are over 50, any future reductions are unlikely to impact you.

It can be tempting for many of us to take Social Security early. Six out of Ten non-retirees feel that Social Security will be bankrupt by the time they are eligible to take benefits! Although the Social Security trust fund is approaching the tipping point of operating at a deficit, it is projected that by the year 2035 the income coming in will still be able to pay about 80 percent of the benefits going out. There are a lot of ways for the government to prevent this reduction, and the changes are unlikely to affect those currently over 50 years old, so the concept of “getting yours while it’s still there” should not be a guiding principle to take Social Security early.

How do I assess what age is best for me to begin collecting social security?

A general rule of thumb is that if you live 12 ½ years from the time you take Social Security, you will “break even,” and the longer you live after that, the better it will be that you waited. Someone with poor health or a family history of a lack of longevity may be better served to take it early, while those in good health and grandparents in their 90’s would be good candidates for maxing their Social Security out by waiting till they are 70! However, not everyone can wait until they are 70 for financial reasons (and maybe cannot afford to burn through their retirement savings to get to FRA or later). Every person or couple is different, and there is not a one-size fits all approach to this question.

You only get one chance to file for Social Security
at the right time to get this important, tax-advantaged,
guaranteed income for life.

You only get one chance to file for Social Security at the right time to get this important, tax-advantaged, guaranteed income for life. To help guide your decision we are here to help! For a complimentary consultation, please visit us at

This post was written by Bob Anderberg, F5 Financial’s National Social Security Advisor Certificate Holder.


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F5 Financial

F5 Financial

F5 Financial is a fee-only financial advisory firm that takes a holistic approach to financial planning, personal goals, and behavioral change.