When should I start receiving my Social Security benefits?

The amount you can expect to receive from Social Security varies quite a bit.

As we at Texas Financial & Retirement like to point out, Social Security should only account for about ⅓ of your income during retirement (the other ⅔ coming from retirement plans and personal savings). For many people, it will actually be an even greater percentage of their income – maybe their only source!  Regardless of whether you’ve crafted a written plan for ‘getting retirement right’ with a professional or you’re simply counting on Social Security and family to take care of you, everyone agrees it’s important to maximize whatever benefits you receive from Social Security.

Among other things, the amount you receive depends upon how much you’ve earned (and therefore contributed to Social Security) during your working years, the age at which you begin receiving payments and the total of other Social Security payments made to the same household (i.e. if your spouse or any dependents in your household also worked enough to qualify for Social Security).

It might seem that anyone in sufficiently good health should wait until ‘full’ or ‘late’ retirement age – so the payments received are higher each month. But that depends on how long you live.

For example, suppose your ‘full’ retirement age from Social Security is 67. And suppose they tell you that if you wait until then to begin receiving your benefits, you will receive an estimated $1,800 per month. Your ‘early’ retirement age is 62, but your monthly payments would only be $1,200 if you retire at that age. That means you receive $600 per month more if you wait.

But waiting means you miss out on all the smaller payments you would have received during the years from age 62 to age 67. Five years of payments at $1,200 per month would total $72,000. Waiting gets you an additional $600 per month, so to break even (compared to what you missed by delaying retirement) would take 120 months. That’s 10 years. In this simplified example, that means you are better off taking the early smaller payments if you die before age 77. But you benefit more by delaying the payments if you live to age 78 or later.

The CDC said that after final analysis of their 2015 data, the average lifespan in the United States was 78.8 years. If that’s true, then because women, generally, live longer than men, a man would most likely have benefitted by taking the early retirement, but a woman would most likely be better off delaying. On the other hand, Social Security says their statistics show that a man who turns 65 today will live, on average, to be 84.3. And a woman turning 65 today will typically live to age 86.6. If that’s true, then both the man and the woman benefit by delaying retirement.

Of course, those are averages – which means some people will live longer and others will live shorter lives. Social Security offers a very basic Life Expectancy calculator which may help you to make a better decision regarding which retirement age is best for you to begin receiving benefits. But it only gives an estimate based upon your gender and current age – it doesn’t take into account your lifestyle, existing health issues, etc.

Of course, the survivor of a couple who have been married may qualify to receive survivor benefits from the deceased spouse’s Social Security, so a married man might wish to delay benefits so that the payments received by his widow after his earlier death would be higher.

Social Security has a Benefits Planner which may help you in taking some of these factors into consideration. A financial professional can also help. Whereas Social Security is only able to provide general answers which apply to large groups of people, a local retirement consultant like Texas Financial & Retirement can help you with specific answers tailored to your specific situation and goals.