Social Security – Worth the Wait? 

Written By: Garrett Bohler, Wealth Manager 

For many people approaching retirement, one of the most important financial decisions they will make is when to start claiming benefits from the Social Security Administration. While workers can begin receiving retirement benefits as early as age 62, waiting until a later age can significantly increase the amount they receive each month. The question many retirees ask is simple: Is it worth the wait? 

The answer depends on several factors, including health, financial needs, life expectancy, and personal retirement goals. Understanding how Social Security works is the first step toward making the best decision. 

Under the Social Security system, each worker has a “full retirement age” (FRA), which is typically 66 or 67 depending on the year of birth. Claiming benefits at this age allows retirees to receive their full calculated monthly payment. However, if someone begins collecting benefits at age 62, their monthly payment can be permanently reduced by as much as 25–30 percent. On the other hand, delaying benefits past full retirement age increases the payment through what are known as “delayed retirement credits.” Benefits grow by about 8 percent per year until age 70. 

For example, a retiree eligible for $2,000 per month at full retirement age might receive around $1,400 if they claim at 62. If they wait until 70, their monthly payment could grow to roughly $2,480. Over a long retirement, this difference can add up to tens or even hundreds of thousands of dollars. 

Waiting can be especially beneficial for people who expect to live longer than average. Higher monthly benefits provide more income later in retirement, which helps protect against outliving savings. Delaying also increases survivor benefits for a spouse, which can be an important factor for married couples. 

However, waiting is not always the best choice for everyone. Some individuals may need the income earlier to cover living expenses, especially if they retire before full retirement age and have limited savings. Others may have health concerns, or a family history suggesting a shorter life expectancy, making it less likely they will benefit from higher payments later on. 

Another consideration is employment. If someone claims Social Security early but continues working, their benefits may be temporarily reduced if their earnings exceed certain limits. Once they reach full retirement age, these earnings limit restrictions disappear. 

Ultimately, the decision of when to claim Social Security should be based on personal circumstances rather than a one-size-fits-all rule. For those with good health, longer life expectancy, and other sources of income in early retirement, waiting until age 70 can often provide the greatest lifetime benefit. For others who need income sooner or have shorter planning horizons, claiming earlier may make more sense. 

Wheelhouse works with our families on an ongoing basis to determine what works best for each family’s specific cases. We always try to coordinate any life updates with the health of your financial portfolio to provide a better determination of when taking your Social Security makes the most sense for your family.