4 Reasons to Start Your Social Security Early

by Joe Plemon on May 30, 2011

Most retirees ponder this question: “When should I start taking my Social Security benefits … at age 62? At full retirement age? Somewhere in between?” The conventional response to this question is “Wait as long as you can.” After all, those whose full retirement age is 66 will face a 25% lifetime reduction by starting at 62. They also have the option of an 8% annual boost for every year they delay benefits, up to age 70. In short, the longer you delay, the greater your benefit for the rest of your life.

However, there are times when a beneficiary should consider tapping that benefit early. Here are four:

1. Poor Health

The break even age — the age when the cumulative benefits of starting early equal the total of the higher benefits one would receive by waiting until full retirement age, is around 78. This means that if you live past 78, you are better served by waiting, but if you don’t live to age 78, you would receive a greater total by starting early. Therefore, if your health indicates that you will not live to age 78, you should consider starting your benefits early. Part of that decision, for married couples, should be the impact on the survivor’s benefit, which is generally 100% of the higher-earning spouse’s benefit.

2. Short on cash

If you simply don’t have enough cash flow to make ends meet, it may be better to start receiving your benefit early than to create debt that will haunt you in coming years. However, if you are continuing to work instead of taking an early retirement,  you need to factor in the earnings limit: you forfeit $1 for every $2 earned over $14,160. It generally wouldn’t make sense to begin your benefit early if you will be giving up a chunk of it.

3. You are Single

Maximizing the survivor benefit, (the primary reason many married couples should wait before starting their Social Security) is a non issue for Singles. Therefore, if other factors lean toward starting early, the single person has more reason to do so.

4. You are a lower-earning spouse

If your lifetime earnings are substantially lower than your spouse’s earnings, you should consider starting your pension early while your spouse waits. The logic is to bring some income into the family now, but allow the higher income benefit, which would also be a survivor benefit, to grow. If the higher income is needed as a survivor benefit, you have wisely grown it. If not, that higher benefit will be appreciated by both spouses for years to come.

Many start their Social Security early for the flimsiest of reasons (their neighbor or co-worker or sister said they should). Reality is that there is no “one size fits all” choice. Personal finance is extremely personal, so whatever decision you make about starting your benefit, be sure you clearly understand your Social Security strategy.

Readers: What is your strategy for starting your Social Security? If you are already drawing your SS benefit, did you start before full retirement age or did you wait? Why?


JoeTaxpayer May 30, 2011 at 8:52 am

Hey Joe, I have a related question – I understand a spouse can get a partial benefit while the primary continues to defer their withdrawal. I’ve not done the research on this strategy, but it looks like a legal way to double dip a bit.

joeplemon May 30, 2011 at 10:02 am

You are right. The following is copied and pasted from this post: Social Security Strategies for Married Couples.

“Suppose the husband is full retirement age and wants to wait until age 70 before starting his benefits. Will the wife, who cannot draw the spousal benefit unless her husband has started his pension, need to wait until he is 70? Not if the couple takes advantage of voluntary suspension.

Here is how it works: The husband files for his benefit and the wife files for the spousal benefit. The husband then immediately requests a voluntary suspension of his pension. The wife will be able to collect her spousal benefit while the husband’s future benefit will grow by 8% annually. I like this strategy because the couple is bringing in “bonus” household income while the husband is patiently maxing out both his future pension and his wife’s future survivor benefit.”

braintory May 30, 2011 at 8:55 pm

Now I can clearly understand your Social Security strategy.Thank for your sharing

Darren May 31, 2011 at 11:02 am

You make good points Joe. I’m quite a long way from being able to collect on social security, so I don’t have a strategy yet.

My intentions are to take good care of my health, enjoy my work, and do it as long as I can.

In this fortunate scenario, I’d be able to delay social security payments as long as possible, letting the future payments grow.

joeplemon May 31, 2011 at 1:12 pm

Thanks for reading about a topic that must seem quite remote to you. I love your strategy: to take good care of your health, enjoy your work and do it as long as you can. Right now your best Social Security strategy is to plan for it not to be there for you. If it is, count it as bonus…if not, you have planned well.

dido May 31, 2011 at 4:36 pm

i agree only in one case – bad health or disability of a person or one member of the family
other states are changeable

Haley June 1, 2011 at 3:53 am

These are very suitable reasons to start our social security.Thanks for your sharing

Everyday Tips June 1, 2011 at 7:30 am

I really don’t think about Social Security much because all I ever hear about is how SS will be insolvent by the time I am old enough to draw on it.

It is a tough decision. I am hoping that if it is around, I can wait to draw to obtain the maximum amount. However, if I think SS days are numbered, I may draw early just to get some money out of it.

joeplemon June 1, 2011 at 7:38 am

Yes, your best strategy is to plan for SS to not be around for your retirement years. I confess that I actually considered your rationale (draw early just to get some money out of it) as I was writing this post…but I decided not to use it. Still, I wouldn’t fault those who draw early just to get what they can while it is still there. Something about a bird in the hand …

krantcents June 1, 2011 at 1:14 pm

My plan is to wait until I turn 70. Besides both my wife and I are still working and don’t need it!

joeplemon June 1, 2011 at 4:18 pm

Great plan! Hopefully, if you love what you do, you will never want to stop working.

sap June 1, 2011 at 4:52 pm

i agree with dido’s statement – only for bad health or disability of a person.

j schwartz June 2, 2011 at 10:22 am

not sure i agree.

lusiana158 June 2, 2011 at 9:32 pm

I really don’t think about Social Security much because all I ever hear about is how SS will be insolvent by the time I am old enough to draw on it.Thank for your post

Marie at familymoneyvalues June 3, 2011 at 2:58 pm

Mr. FMV worked for the Soc Sec Adm for ages. We always thought that it wouldn’t be around for us either, but here we are eligible to collect.

My plan is to wait until my full retirement age (66). My fear is that by then, although we will still be eligible, the benefit will be pretty darn near taken back by taxes. However, it is absolutely scary how fast you get back what you put it!

I never approved of the program, but we won’t go there….

Mark January 18, 2012 at 2:05 pm

Do you have a plan for if the wife is 4 years older, but always made less. 20k vs. my 40k. if she collects at 62 she would get my amount for less years. Or she waits and gets a bigger amout? What would you do?

Joe Plemon January 19, 2012 at 4:54 pm

Mark — no simple answers here. I suppose the best scenario would be that both of you continue working until you reach full retirement age (FRA). However, if your wife starts at age 62, it becomes even more important that you, as the higher wage earner, continue working until FRA. By waiting, you have not only increased her survival benefit, but would make it possible for her to possibly draw more…she could draw a spousal benefit ( 1/2 of your benefit) if it is more than what she drawing on her own at that time.

To summarize, she could start her benefit when she is 62 and continue drawing it until you start yours at age 66. At that time, she would qualify for a a spousal benefit which would probably give her a pay raise.

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