When Should You Apply for Social Security?

Should you apply for your Social Security benefit at age 62 or later?

Should you apply for your Social Security benefit at age 62 or later? According to the Social Security Administration, most people who are eligible for Social Security choose to start their benefits early.

You can claim Social Security any time from age 62 to 70, but the amount you receive grows larger the longer you wait to receive it. Many people come out ahead if they wait at least until their full retirement age (FRA), which is different from the day you “retire” from your job. For people born 1943 to 1954, full retirement age is 66, reaching 67 for those born in 1960 or later.

Those who take their benefits earlier that their full retirement age face reductions of 6 2/3% per year for the first three years they take benefits prior to their FRA (e.g., an individual with a FRA of 66, taking benefits at 63 will see a 20% reduction in their SS benefits), and 5% per year for each year further out than three years (e.g., if the same person were to take their SS benefits at age 62, the reduction would be 25%). On the other hand, there are “delayed retirement credits” of 8% per year up to the age of 70 for those born in 1943 or later.

The Social Security Administration website gives an example of an individual whose full retirement age is 66 and who would receive $1,000 a month if they waited to apply at that age. If they applied for benefits at age 62, they would receive $750 per month, but if they waited until age 70, they would receive $1320 per month.

At first glance, it might appear that everyone should wait until they are 70. But that is not the case. The answer is “it depends.” The things on which the answer may depend are many, including your age when you stop working, how much you have set aside in savings, your life expectancy, whether you are married or single and whether your spouse earns more — or less.

For a person who chooses to delay applying for Social Security benefits until they reach 66, it generally takes about 12 more years to collect as much as if you started getting checks at 62. In a New York Times article from 2009, Avram Sacks, a Social Security law analyst for CCH, a tax and accounting information service said: “If you are in good health, and you expect to live to 78 or longer, then the advantage goes to the person who waits,” he says. “But that’s assuming we’re all prophets and we know what’s going to happen tomorrow, and we don’t all know.”

That’s great, as far as it goes, but if delaying Social Security forces you to eat into other savings at a greater rate than you normally would, you might want to consider taking it early. In addition, you might be able to enjoy spending the money more when you are at a younger age (say from 62 to 66) as opposed to waiting until 78 to break even. After all, you’ll likely be more mobile, active and generally more healthy at 62 than at a later age.

Another factor that could affect your decision is whether you intend to work (even part time) after you retire. Social Security has earnings tests that will reduce your Social Security benefit by $1 for every $2 you earn over $14,640 between age 62 and the year in which you reach your FRA, and by $1 for every $3 you earn over $38,880 in the year in which you reach your full retirement age. If your earnings will keep you from collecting your full Social Security benefit until you get closer to your FRA, perhaps it will make sense to delay applying.

If you are among those who think that Social Security will cease to exist in the future, you would be inclined to apply for your benefits early in order to “get it while the gettin’s good.” Personally, I feel that Social Security will be there in the future. I also believe that those who are at or near retirement age will be spared any cuts.

We’ve talked about whether Social Security will be there; how about you? If you are not sure of your life expectancy (how many of us are?), you might choose to take the bird in the hand, rather than wait for the two in the bush.

Ultimately, the answer as to when to take your Social Security retirement benefits is up to you.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at johnfgrobe@comcast.net to discuss schedules and costs.

About the Author

John Grobe is President of Federal Career Experts, a firm that provides pre-retirement training and seminars to a wide variety of federal agencies. FCE’s instructors are all retired federal retirement specialists who educate class participants on the ins and outs of federal retirement and benefits; there is never an attempt to influence participants to invest a certain way, or to purchase any financial products. John and FCE specialize in retirement for special category employees, such as law enforcement officers.