When Should You Claim Social Security? The Answer Is More Personal Than Most People Realize

You can begin collecting Social Security as early as age 62, claim at your Full Retirement Age (FRA), or delay benefits until age 70. Claiming early permanently reduces your monthly benefit, while delaying may increase your benefit by up to approximately 8% per year beyond FRA until age 70, subject to Social Security Administration rules. For many retirees, waiting until age 70 may result in a larger monthly income and potentially greater lifetime benefits, depending on individual circumstances.

Because of these rules, many articles and software programs focus on one objective: maximizing the amount of money you can collect from the Social Security system.

While that’s an important consideration, we believe the real question is much bigger:

What claiming strategy creates the strongest overall retirement plan?

The Best Strategy Depends on Everything Else

At Plan & Prosper, we don’t view Social Security as a standalone decision.

We evaluate it alongside:

• Retirement spending needs
• Investment assets
• Taxes
• Future healthcare expenses
• Market risk
• Longevity expectations
• Estate planning goals
• Spousal and survivor benefits

What we’ve found is that there is no age that is automatically “best” for everyone.

In some situations, delaying benefits can be one of the most powerful retirement planning tools available. In others, waiting too long could unnecessarily deplete investment assets and reduce future portfolio growth.

Our role is to identify the sweet spot where Social Security, investments, taxes, and retirement goals work together.

Looking Beyond Social Security Optimization

Social Security provides a lifetime income benefit under current law and can play an important role in protecting retirees from longevity risk. For many individuals, a larger monthly benefit can provide valuable financial stability later in retirement.

For that reason, we frequently evaluate scenarios where clients delay benefits and temporarily fund retirement from investment accounts, cash reserves, or other income sources.

However, unlike many Social Security optimization programs, we don’t stop our analysis there.

Most optimizer tools focus exclusively on obtaining the largest possible lifetime Social Security benefit. While mathematically appealing, that approach doesn’t always consider what happens to the client’s portfolio in the process.

If delaying Social Security requires spending a substantial percentage of retirement assets, the loss of future portfolio growth may outweigh the benefit of a larger Social Security check.

That’s why we evaluate both sides of the equation—not just how much Social Security you receive, but how the strategy impacts your overall financial picture.

In some cases, we may discuss the option of delaying Social Security and generating retirement income from other assets, depending on the client’s financial plan.  But we only recommend doing so when the numbers support it. If waiting would require excessive portfolio withdrawals, increase financial risk, or reduce long-term wealth, filing earlier may be the better decision.

The answer is rarely found in a generic calculator. It’s found within a comprehensive financial plan.

Financial Planning Is About Creating Options

One concern we often hear is:

“If I wait to file, what happens if something changes?”

The good news is that delaying Social Security doesn’t eliminate flexibility.

In fact, it often creates it.

When a client chooses to delay benefits, they’re retaining the option to file later. If markets experience an extended downturn, expenses increase unexpectedly, or personal circumstances change, we can revisit the decision and adjust the strategy.

One of the primary goals of financial planning is creating options that help protect clients from circumstances outside their control. A well-built retirement plan should be able to adapt as life changes.

Many clients are initially hesitant to spend from investment assets while delaying Social Security. That’s understandable. However, if the financial plan supports the strategy, delaying may allow the benefit to grow while preserving the flexibility to file in the future should economic or personal circumstances warrant a change.

Different Households Often Require Different Solutions

The longer we work with retirees, the more convinced we become that Social Security decisions should be highly personalized.

For some married couples, it may make sense for the higher-earning spouse to delay benefits until age 70. Because the surviving spouse generally keeps the larger benefit, increasing that higher benefit can provide valuable income protection later in life.

For someone who retires several years before claiming Social Security, delaying benefits may create a valuable opportunity to draw strategically from cash reserves, taxable accounts, or Roth assets while completing Roth conversions during lower-income years.

In another situation, claiming early may be the right move. A client may have higher spending needs, health concerns, fewer portfolio assets, or a strong desire to preserve investment capital for future growth. In those cases, the time value of money and reduced portfolio withdrawals could outweigh the advantages of waiting.

These examples highlight an important reality:

Each of these strategies can be correct. The right answer depends on the client’s goals, resources, health, tax situation, family circumstances, and overall retirement plan.

Don’t Forget About Taxes

Another factor that is frequently overlooked is taxation.

Many retirees are surprised to learn that Social Security benefits can be taxable.

Depending on your overall income, up to 85% of your Social Security benefit may be subject to federal income tax. Withdrawals from traditional IRAs, pensions, investment income, required minimum distributions, and other taxable income sources can affect how much of your Social Security becomes taxable.

This is one reason we evaluate Social Security claiming decisions alongside tax planning.

For example, delaying benefits may create opportunities to perform Roth conversions during lower-income years before Social Security and Required Minimum Distributions begin. In some cases, this can reduce future taxes, improve retirement cash flow, and increase the flexibility of future withdrawal strategies.

The interaction between Social Security and taxes is often just as important as the claiming decision itself.

What About Concerns Over Social Security’s Future?

We occasionally hear concerns that Social Security’s long-term funding challenges mean retirees should claim benefits as early as possible.

While the Social Security system does face funding pressures, we generally discourage clients from making claiming decisions based solely on fears that benefits will disappear. Throughout its history, the program has undergone adjustments to address funding concerns, and many experts expect future changes to involve modifications to taxes, retirement ages, or benefit formulas rather than the elimination of benefits altogether. The Social Security Trustees continue to project funding challenges, but discussions about reform remain ongoing.

We believe Social Security decisions should be driven primarily by a client’s retirement income needs, tax strategy, portfolio assets, and long-term goals rather than speculation about future legislation.

The Bottom Line

When it comes to Social Security, there is rarely one right answer.

The goal isn’t necessarily to collect the most money possible from Social Security. The goal is to create the best overall outcome for your retirement.

That means balancing:

• Reliable lifetime income under current law
• Portfolio preservation
• Tax efficiency
• Survivor income protection
• Market risks
• Lifestyle goals
• Financial flexibility

Sometimes delaying benefits until age 70 makes sense.

Sometimes claiming earlier is the better choice.

Most often, the answer lies somewhere in between.

At Plan & Prosper Financial Partners, we help clients evaluate Social Security as part of a comprehensive retirement income strategy so they can make informed decisions with confidence—not based on generic rules of thumb, but on what works best for their unique situation.

Ruthanne & Seth Monteleone
Plan & Prosper Financial Partners

Disclosure: This article is for educational purposes only and should not be considered tax, legal, or investment advice. Consult with qualified professionals regarding your individual circumstances.