Wealth Column: Best time to claim social security? It depends

Unless you’re retiring after you reach the full retirement age, or are in poor health, you’ll probably want to either keep working or avoid drawing Social Security benefits.

Bruce Helmer and Peg Webb sit next to each other at a table.
Bruce Helmer and Peg Webb, financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on KLKS 100.1 FM on Sunday mornings.

Unless you’re retiring after you reach the full retirement age of 66 or 67 (depending on your birth year), you’ll probably want to either keep working or avoid drawing Social Security benefits. That’s because the decision to claim benefits early versus delaying boils down to a trade-off between a lower monthly benefit that you receive over a longer period of time and choosing a large monthly benefit over fewer years.

Why you may not want to use your earliest age to claim Social Security

Claiming benefits at age 62, the earliest possible age to claim Social Security, will leave you with a smaller monthly benefit. But if you delay receiving benefits beyond your full retirement age, you will increase your benefit by 8% for each year you wait — up to age 70, beyond which there is no advantage to delaying.

But here is also something interesting about how the IRS calculates the increase: The benefit you get from delaying your Social Security claim does not increase in linear fashion; it rises in two steps.

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As Michael Finke, a professor at the American College of Financial Services, recently noted in ThinkAdvisor, these steps were originally created arbitrarily, as a shortcut to simply benefit calculations. The steps result in “differences as high as $10,000 in the incremental value of waiting an additional year to reach each new step,” he notes. Said more simply, the benefit of claiming after step years is much larger than other years.

Women take careful note

This differential in step-up is especially important for women. For example, a woman worker in 2022 who’s eligible to receive $20,000 in Social Security income benefits at 62 can increase her income significantly by waiting to claim up to age 70. Mr. Finke’s analysis concluded there are in most cases a distinct advantage for a healthy woman to delay taking benefits:


  • The percentage increase is 5% each year up to age 64, then steps up after her 64th birthday to 6 2/3% each year up to her full retirement age of 67. 
  • After 67, the bonus steps up to 8% each year until age 70.

When delaying isn’t the best idea

Of course, your age is just one factor to keep in mind when deciding to claim your Social Security benefits, including your family health history. Maybe you or your spouse/partner want to continue to work part time, which will affect your eligibility for benefits. Keep in mind the IRS formula for calculating benefits is outdated (it doesn’t reflect recent longevity improvements, for one thing), and so the value of future income payments is always higher — unless an individual is in poor health and doesn’t expect to live very long.

By working with an adviser experienced in retirement planning and Social Security benefits analysis, you can identify the best time to retire, develop a tax-smart income strategy and potentially maximize the lifetime benefits you and your spouse/partner are eligible to receive.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on News Radio 830 WCCO on Sunday mornings. Email Bruce and Peg at Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment adviser. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL.

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