When To Take Social Security? Make So Much It Doesn’t Really Matter

Are you wondering when to take Social Security? The answer is a little more complicated than it seems. Officially, you can start your retirement benefit at any point from age 62 up until age 70. Your benefits will be higher the longer you delay taking Social Security due to Cost Of Living Adjustments (COLA) that tend to keep up with inflation.

But perhaps Social Security is something that none of us should rely upon in retirement. After all, the system is underfunded by about 25% – 30%. The eligibility age will likely have to be raised or benefits will likely have to be cut to make the system whole.

Mentally, as a Gen Xer, I've never counted on Social Security being there for me. Instead, I've been focused on the new three-legged stool in retirement: personal pre-tax retirement accounts, personal taxable retirement accounts, and personal hustle. In other words, the three legs all consist of you supporting yourself.

It's very hard to count on the government for retirement support when the government has a difficult time managing its own budget. Further, the government is always changing who is eligible for benefits and who isn't. Therefore, focus on what you can control.

As a personal finance writer since 2009, I believe the best age to take Social Security is at age 66. Now let me explain my rationale.

How Much Do We Pay In Social Security Tax?

Despite my pessimism about our nation's retirement system, it's a good idea to have a framework for when to start collecting benefits anyway. I'm confident all of us will eventually receive some sort of national retirement benefits. If the government decides to fully break its Social Security promises, there will be a national revolt.

Make no mistake about it. Social Security is our money.

In 2023, employees are required to pay a 6.2% Social Security tax (with their employer matching that payment) on income up to $160,200, up from $147,000 in 2022, and up from $142,800 in 2021. The maximum income amount for Social Security tax tends to go up about 2% a year.

In other words, if you make $160,200, your maximum FICA tax will be $9,932.40. But don’t forget. You also have to pay a Medicare tax rate of 1.45%. Therefore, your total FICA tax rate is 7.65%. 7.65% X $160,200 = $12,255.3. If you are self-employed, you have to pay double (15.3%)!

Maximum Income That Faces Social Security Tax (FICA)

Maximum income that faces social security tax (FICA tax) historical chart through 2023

Given how much we pay in FICA tax each year, all of us have a right to eventually collect Social Security. If the government didn't charge us a Social Security tax each year, we could invest the money, use the money to save up for a down payment on a house, or spend it to live a better life.

You can read more from the Social Security Administration.

Best Age To Take Social Security

The three main factors that determine when to take Social Security are:

  • Health And Life Expectancy
  • Financial Situation
  • Marital Status And Age Difference

There are no certainties for when to collect in order to receive the highest benefits over your lifetime. However, there are some general rules most of us can follow to increase our chances of getting the highest benefits possible.

Based on the above three factors, around age 66 is the best age to take Social Security. According to the Social Security Administration themselves, the trust fund is expected to run out by 2034 if the retirement age isn't lifted or benefits are not cut.

Social Security trust fund benefits chart, expected to run out by 2034

Delay Taking Social Security If You Are Healthy

If you are in great health at age 62, then it's best to delay Social Security. If you are a single person in poor health, you should file for Social Security benefits as soon as you are eligible.

For every year you delay taking Social Security, you'll get an extra 2/3 of 1% for each month after your birthday month. This adds up to 8% for each full year you wait until age 70. Actuarially, it's financially more beneficial to start taking Social Security between 68 – 70.

The full retirement age for Social Security benefits is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67. For anyone born in 1960 or later, full retirement benefits are payable at age 67. The IRS has a whole PDF about our nation's retirement benefits.

Once you reach full retirement age, the delayed benefits start accruing at the beginning of your birth month. For example, if you were born on February 18, you'd reach your full retirement age on February 1. If you wait until April to take your benefits, you'll get 101.4% of your full retirement benefit. Wait one year and you'll get 108% of your benefits.

You can earn delayed credits until age 70, when you'd receive 132% of your full retirement benefit. For example, if you'd receive $1,500 per month at your full retirement age of 66, delaying your benefits to age 70 would boost your monthly check to $1,980.

Delay Taking Social Security If You Are Financially Secure

Let's say you retire a 401(k) millionaire at age 62. You are also very healthy. In such a scenario, delaying Social Security at least until the full retirement age of 66 will likely result in more Social Security benefits over your lifetime.

Early retirement, according to the government, is retiring before age 66. Therefore, your Social Security benefit is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.

For example, if you elect to take Social Security at age 62, you will only receive 75% of full benefits. Therefore, it may be good for most financially savvy people of average-to-good health to wait until at least the full retirement age to start receiving Social Security.

The IRS has a nice reduced benefits table here. Remember, once you elect to take Social Security benefits, you've locked in your Social Security benefits plus cost of living adjustment for the rest of your life.
Social Security benefits each year based on an inflation index.

The Social Security administration does raise Social Security benefits each year based on an inflation index. For example, in 2023, the Social Security cost of living adjustment increased by a whopping 8.7%! Hence, we can at least count on benefits to increase with inflation.

Reduced social security benefits if you take Social Security early

Taking Social Security When You're Married Or Single

Here's where deciding when to take Social Security gets a little tricky. First of all, know that if you die single and childless, all the Social Security you would have received after age 62 will go to nobody. Unlike a will or revocable living trust, the government doesn't pay out your Social Security benefits to someone of your choice. The government simply smiles and reabsorbs your money. I'm not sure why there is not a bigger objection given it is our money.

Therefore, before you die, you may strategically want to get married to someone to protect both of your Social Security benefits. It's too bad the government is not more magnanimous with survivors benefits. How amazing would it be to designate your survivors benefits to a charity you really care about.

Like potentially eliminating the stepped-up basis, the government reabsorbing your Social Security payments if you die single and childless are signals to lookout for yourself in retirement.

Joint Life Expectancy Calculations For Social Security

The second thing to know about Social Security when married is your joint life expectancy. When couples are planning for retirement or annuity payments, they often use a joint life expectancy in which they take the life expectancy of their partner (who may become the beneficiary) into account as well.

The longer your expected joint life expectancy, the more beneficial it is to delay filing for Social Security and vice versa. For example, if your spouse is 15 years younger than you, your joint life expectancy will likely be longer. Here is a joint life expectancy calculator by the SSA. Despite making actuarial calculations, there's still no guarantee about the best time to take Social Security for each spouse. Everything is just a guess.

Then there is a situation where there is a higher earning couple and a lower earning couple. In general, it is recommended the higher earner delay until 70, health permitted, and the lower earner file sooner for Social Security.

When the higher earner delays benefits, it increases the amount of benefits the couple gets so long as either partner is alive. Further, waiting increases the person's own retirement benefits and the survivor benefits, if the lower earner would outlive the higher earner.

For the lower earner, if either partner is in poor health, it's better to file for Social Security earlier. The lower earner is thinking about how long it will be before one spouse has died. The higher earner needs to estimate how long it will be before both spouses will die.

How To Calculate the Break-Even Age For Taking SS

It's always good to use a numerical example to calculate when it's best to take Social Security. I'll use myself as an example. Let's pretend I'm single.

The year is 2043, and I have reached full retirement age 66. I'm deciding whether to begin collecting benefits now or to delay for one year.

If I collect now, I’ll receive $2,800 per month. But if I wait one year, my benefit increases by 8% each year until age 70. In other words, if I wait one year, I'll receive an additional $224 a month in Social Security benefits. If I decide to wait a year to collect, how long would it take me to break even?

By delaying one year, I'm forfeiting $33,600 ($2,800 X 12), but gain $224 a month. To find out my break-even age, I would divide $33,600 by $224 a month, which comes out to 150 months or 12.5 years. In other words, if I wait one year, it will take me 12.5 years to break even. The math 12.5 years to break even for you too if you wait a year.

12.5 years is a damn long time to wait at an already advanced age to break even. I would have to confidently believe I will live past 78.5 years old (12.5 years + 66 years) to break even. If I was in average-to-good health, it's likely a safe bet to delay. For example, let's say I live until 96. Then I would come out ahead by $47,040 ((96 – 78.5) X 12 X $224).

To delay taking Social Security for two years until age 68 is likely the most I would delay. My break even point would be a little more than 13.5 years, or 79.5.

Create A Social Security Bridge

If you get laid off or retire before full retirement age, consider creating a Social Security Bridge to last you until full retirement age. Your Social Security Bridge can be your robust tax-advantageous retirement plans or your taxable investments spitting out passive income.

Below is a base case framework for how much you should target in taxable and pre-tax accounts by age. By age 60, shoot to have $1 million in your 401k or IRA and $3 million in taxable accounts. This way, you should have no problem waiting until full retirement age to collect SS.

Social Security Bridge to hold you over before taking Social Security at full retirement age

Even if you don't have a large 401k or a significant passive income portfolio, you can carve out a portion of your investments as your Social Security Bridge. These investments should be relatively low risk in nature. Think municipal bonds, treasury bonds, CDs, and money market accounts. The Social Security Bridge idea is most applicable for single people.

If you are married, you could always use your spouse's Social Security benefits as a bridge. In other words, staggering when to take Social Security is a common strategy.

The Best Social Security Withdrawal Age: 66

I've concluded if we are in average-to-good health, we should wait until full retirement age (66) to take Social Security benefits. The next best ages to collect are 65, 64, 63, 62, 67, 68, 69, 70.

Our life expectancy is generally getting longer. With proper dieting, regular exercise, and continued advancements in healthcare and science, I'm hopeful the majority of us will live beyond our 80s.

However, I still don't recommend waiting until age 70 to collect SS given the incredibly long break-even period. You would have to be confident you will live past 83 to delay collecting until 70.

Can you imagine paying FICA tax for 48 years after college and then dying the year you want to collect SS?

Time Value Of Money Is Important

The time value of money is real and important to take into consideration. At least the government is keeping up with inflation with cost-of-living-adjustments.

Use the Social Security money to live a better life while you are younger and probably healthier. Health deteriorates at a faster rate the older we get. And when we get ill at an older age, we tend not to recover as quickly or recover at all. Your quality of life matters.

It's easy to say the best age to take Social Security is at full retirement age. However, I'll see how I feel at age 62 or whenever I'm eligible if the government changes the rules. After paying FICA tax for decades, it will probably be too tempting to delay much longer.

Each SS payment I get will feel like a relief that I'm finally getting some of my money back. And the more payments I get, the happier I'll be.

Get Life Insurance Before It's Too Late

One of the most striking things I've discovered during the pandemic is this chart below. It shows a huge drop off in the pace of retirees collecting SS in 2020 and 2021. One would think that with millions of people losing their jobs, more people would have collected, not less.

When to take Social Security - Best at 66. The pace of retirees collecting Social Security during the pandemic plunged

However, the sad reality is that most of the COVID-19 deaths occurred in people over 65. As a result, the pace of retirees collecting SS declined. Can you imagine waiting until full retirement age to collect only to die a year before?

The pandemic has made us appreciate life more. Therefore, we should do more to insure our lives. I recommend getting a tailored, no-obligation quotes from PolicyGenius.

PolicyGenius enabled my wife to double her life insurance coverage (match mine) for less money during the pandemic. As co-parents with equal business responsibilities, it only made sense to get equal life insurance coverage.

Note: The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2023, your maximum benefit would be $3,627. However, if you retire at age 62 in 2023, your maximum benefit would be $2,572. If you retire at age 70 in 2023, your maximum benefit would be $4,555.

Related post: Pre-Retirement Checklist For Post-Pandemic Life

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60 thoughts on “When To Take Social Security? Make So Much It Doesn’t Really Matter”

  1. I started Social Security at age 62, in 2018 because of credit card debt. Paid off $28,000 in 24 months. I had left the workforce at age 50, living on a small USAF pension and credit cards. Once I hit zero debt I started saving. From 1986 to 2020 I saved up cash and only purchased used cars, most of them under $4,000. In 2020 I leased a new Ford Edge, then purchased at month 30, Oct 3rd 2022 for $21,762, current balance $3,749 it will be paid off in July 2024. Total interest paid $600. Today I have $18,000 in savings and in Dec 2024 my account balances will be $30,000.

    The one thing that I have learned that is much more important than when to start Social Security, is start retirement debt free.

  2. Christopher Stevens

    Great article, as always, but I’m afraid I have to disagree with the timing and think it’s best to take the money as early as possible.

    My thoughts are to take SS as soon as I’m eligible, especially if I don’t need it. If I invest 75% of my SS benefits into other assets that generate cash flow, then from age 62-67, I’ll generate significantly more cash flow than if I wait. Plus, if I wait, and the rules change, or the benefits are reduced due to the government running out of SS money, then I might get much less or nothing. “A bird in a hand is better than two in a bush.” I want to get some of my SS money back rather than getting less or nothing.

    I understand I’ll give up 25% of my benefits, but I’d instead get 75% guaranteed now and invest that money since I won’t need it. From age 62 to 67, I’ll have ~$140,000 at an annual interest rate of 4.6% (compounded annually), but I can likely do much better than 4.6%. The difference in what I’d get if I waited until 67 is $897 per month. It would take me 13 years (age 80) to earn $140,000 at $897 per month. I don’t know that I’ll live to age 80, and I hope I do, but 13 years to recoup the $140K is a LONG time to break even. And that’s not counting the continued positive cash flow from the $140K – that $140K would be ~$250K at an annual rate of 4.6% for 13 years. With that, it would take ten years to match the extra $897 per month. I’m taking the money at age 62, healthy or not!

    Maybe my calculations are off, but according to my numbers, the early you take the money, the more you’ll get, as long as you invest the money the first five years. What do you think, based on this information? Am I missing something?

    Thakn you, SAM! As always, I love reading your emails, books, and posts. They’ve helped me SO much!

    1. While I agree with your logic, I believe there is even a more important reason to take social security as early as possible. Given the break even age is nearly 80 one needs to consider one’s abilities at that age and how it will affect spending.
      Here’s an article on marathon runners and notice how from 80 years onwards the time, even for the best athletes in the world, rapidly increases:
      At 80 we are also very unlikely to have the same spending habits and desires we do at 62. At 62 I still backpack around the world but I know by 80 that it will not be as easy. In fact, it may not even be possible.
      Thus I will take the money now and and try to actually enjoy it while I am physically capable.
      I believe you may be in the same position as I. It sounds like you enjoy saving money and investing it. I do as well and find it very difficult to actually spend money. I retired in 2014 from the Federal Government and to date I have yet to spend half of my annual pension apart from purchasing a home in Guatemala (and that was less than $100,000). Is that extra $140,000 from Social Security going to make any difference later in your life?

      1. Very good points Alan. I started SS @ 62 and I know people who waited until FRA or later to start SS, and never made it to the break even point. My father waited until 65 and died in a car accident 11 months later. Saving SS over $18,000 vs starting SS at 62 Or later they had to go into a full time care facility and the bigger SS benefit went to the care facility. What do I care if they get a bigger check? Waiting until FRA only increases my check by $450 per month, so at age 83 I would only be ahead by just $12,612.
        By age 90 it would be $50,412. But, from age 83 to 90 total retirement income from SS and my USAF pension equals $315,000, so if I live that long I will be just fine.

  3. Buddhist Slacker

    Thank you so much for this. It didn’t occur to me to calculate a break-even point, despite that being the obvious calculation to make lol. Thank you I’m going to incorporate this into my calculations. I came to the same conclusion basically through a different set of calculations but I calculated that my optimum age to take social security is 67. My full retirement age is 67. I also included in my calculations that I am not eligible for Medicare until age 65. Therefore I need the free health insurance from my employer until then, because you know how expensive health insurance is! This turned out to be the single most important factor, though I’m in completely good health. Also I did not realize I would need to pay a Medicare supplement monthly. This also changed my calculations.

  4. Most of the financial gurus I follow say to wait at least a period of years before collecting social security, yourself included. But I wonder why I wouldn’t collect as soon as I am able and invest the benefit in something iron-clad that yielded 4%. My dad’s old high school buddy, who also happened to be his accountant, told him the same thing.

  5. I agree that getting married to pass on the benefits is a great idea. Unfortunately the government requires the spouse to have lived in the United States for a period of time even to be eligible. I live in Mexico and my girlfriend is Mexican and we have no intention of moving to the United States so even married, she would never receive any benefit. As you say, it is our money, but the government sure does try to keep it!

      1. She would have to reside in the US for five years, but it does not have to be consecutive. There are some countries that have agreements with the US where this requirement does not have to be met but this does apply to Mexico.
        Given that we do not desire to live in the US and given the cost of living, it would not be beneficial for her to be there just to collect survivor benefits.

        1. Gotcha. 5 years is a long time! How much a year do you guys think you’re saving for the same quality of life in Mexico?

          Maybe you’d like to write a guest post one day about your move and the finances. I’m sure many people would be interested in reading!

          1. I plan on purchasing a home later this year and I would consider writing a guest post then. Right now I live in a lower income neighborhood and the quality of life would not provide a fair comparison.
            I will say though that the biggest savings for us come from lower utility costs, lower grocery bills, lower real estate taxes, lower restaurant costs, and most importantly lower travel costs as we have always enjoyed weekend trips. Tradeoffs include higher fuel costs and higher costs for imported goods and often a lower standard of quality (but this is often offset by a value consideration – as an example, unlike the USA where a cheap hotel is often dirty and occupied by unsavory guests, the cheap hotel in Mexico is still cheaper than a cheap hotel in the USA but often will be quite clean and the clientele is lower to middle, middle class Mexican.

            1. Buddhist Slacker

              I would love a guest post on this! Sounds like I would have the same level of spending as you do!

  6. There is another factor to consider when deciding on the age to collect social security: minors living at home. If you begin to collect social security, any minor living at home will receive 50% of your benefits until the age of 18 (or so) or, if the child remains in high school after 18, the benefits continue to a maximum age of 19 years, 2 months or until school is finished, whichever is first. The money must be spent on his or her expenses and you are expected to keep records of those expenses. Or, the money is placed in a savings account that is ultimately given to the minor.
    In my case, the Covid panic led me to realize that I may not live longer than I reasonably hoped for. Also, the tumultuous politics of 2020/21 and the social security reform proposals being batted around during campaigning, etc. led me to start the benefits at 66, rather than wait to a later date.
    Financial Samurai/ Mr. Sam: you may want to explain the WEP (Windfall elimination program).
    Finally, I have no financial interest in this company, but Maximizemysocialsecurity.com provides optimization strategies to determine the best time to start the benefits. It costs about $45/yr. There are other websites which provide similar estimates. Some require payment, others are free.

  7. I look at Social Security more as longevity insurance. If you are married, the likelihood of one of you reaching 83 is quite high, the breakeven age. So I think its best for the lower earner to take it at full retirement age, and the higher earner to take at age 70. That’s what we are doing. For that bridge we will need to withdraw from savings which will be about 2% until we are both receiving social security, then our withdrawal rate will be your recommended rate of 1%

  8. That was an engrossing read! You can begin receiving Social Security payments at the age of 62, but your benefits will be permanently decreased. However, once you reach full retirement age, you are eligible for full benefits. It is crucial to know that applying for a social security check before attaining full retirement age may result in a 25% to 30% reduction in income. Furthermore, this drop is permanent.

  9. In my case it is all about providing my wife the most peace of mind she can have after I’m gone. She’s still running full marathons and playing 4.0 tennis at age 66. She has zero health concerns, while I have a few very weird hereditary things that make my longevity difficult to predict. But I do know if I postpone to age 70 then when I die she will inherit my exact benefit so I want that to be the biggest possible. Her own Social Security is negligible since she chose to be a stay at home mom so she is drawing it now that she has reached her full retirement age. We don’t need the income but I know my very cautious wife will enjoy having about half of her living costs covered by a government check and the other half covered by a 1% withdrawal rate assuming she outlives me. Plus since we’ll hit 70 in just a handful of years we probably won’t be impacted by program reductions any time soon. Very nice summary of the Social Security conundrum.

  10. David Michael

    Thanks for another good article on SS. I am always surprised that most young workers (25-50) don’t believe SS will be around when they plan to retire. Personally, at age 84 now and having SS since 65 (almost 20 years), it allowed me to retire at age 56. Even though I was in the top five percent of earning power when I was younger, everything changed with a divorce, cancer, and lost pension and annuity. Yes! Like your readers, I always assumed we would retire with millions in the bank. Surprise! Life threw in a few curveballs, and our main source of income now is SS. Yet, my second wife of nearly forty years and I have had a wonderful retirement with savings of $200,000 in Treasury Bonds and Dividend Paying Stocks paying us $600 a month, and $2400 from SS for a total of $3000 a month budget. That’s it! No millions. Yet we have traveled the world for over 12 years and completed most of the goals on our bucket list while still in good health.

    I mention this because Social Security is one of the most important items in the Federal Budget. Nearly 70 percent of retirees depend exclusively on SS. Imagine what this country would be like with an increase of homeless by another fifty percent today. We have friends who depend on $800 a month SS at 75 years old, and still work part time to make ends meet. If you watch the movie “Nomadland” which won three oscars last month, based on Jessica Bruder’s excellent book with the same title, it focuses on RVers who depend on SS of $1000 a month or less. I was interviewed by Jessica when we worked at Amazon for Christmas season in Ferndale, NV. But…we chose to work there during our RVing days not because we had to. And, we enjoyed our experience very much while earning $25,000 over a few months. About half of the people we spoke with used the money for cruises during the rest of the year. For others, it provided a much needed supplement to SS. So long story short, social Security is one of the most important items in our federal budget IMO. You may actually depend upon it yourself when you reach the ages of 70-90. Nothing is certain in life.

  11. Great article and thanks to the commenters as well.
    I’m retired at age 66, not yet taking Social Security, and revisit this issue often.

    Here are some additional thoughts:

    – inflation may erode the value of dollars received in the future

    – if you’re already receiving Social Security, then your Medicare premiums are automatically deducted from it (making life a tiny bit simpler) and you are partially protected from future increases in Medicare premiums – your premiums can only increase to the extent that your Social Security increases. A person on Medicare but not yet taking Social Security will see the full increase in premiums

    – there are several white papers online that discuss the concept of means-testing of Social Security (similar to how Medicare premiums are already means-tested using the IRMAA amounts)

    – the additional income from Social Security may affect your other decisions if you are trying to stay within a targeted income bracket, such as your level of IRMAA, your ability to do Roth conversions, etc

    1. Buddhist Slacker

      Thank you so much about the info about the Medicare premiums! I didn’t know increases were capped based on social security increases. Invaluable info thank you again.

  12. Poignant article, packed with great information. I also enjoy all of the insight in the comments section. As most FS readers, I’m planning on SS not being there, atleast not in the form it is now.
    Therefore, I’m making other arrangements to have passive rental income, the wife’s PERA and interest/dividends from savings and investments be my 3 legged stool.

    If social security is there, my plan is to take it as soon as I’m no longer receiving a paycheck, whether that be 62 or 68.

  13. I’m 40 and am socking away about 40% of my pay into various savings [401(k), HSA, etc.]. I’m also in the middle of cancer treatments. With current medical technology, the cancer isn’t curable, but it is treatable. So my plan is to work as long as I feel up to it and then claim SSDI when it gets to be too much. I could claim it now—stage IV cancer actually has a perk—but I make more money working than I would with it. For the moment, I’m inconvenienced rather than incapacitated.

    And who knows? Three years in and I’m still able to telework. Maybe I’ll be able to collect normal SS after all. And maybe there’ll be a cure.

  14. I would suggest that if you can afford to wait and you have good health and a reasonably long life expectancy, you should wait til 70. It’s a form of old age insurance that allows you to spend more knowing your risk of living longer than you thought and being destitute in old age is diminished because you will have a bigger amount coming in when you are very old. It’s like buying a deferred annuity.

  15. Never get tired of this topic, and FS I recall a very well-considered post you made some years back about “Get What’s Yours: The Secrets to Maxing Out Your Social Security” by Lawrence Kotlikoff. Calculating ‘when to take’ is like adjusting your sunglasses.:-) As time goes by and my contemporaries get closer to collecting S.S., they become quite enthusiastic about the program.

    Three things to add to the conversation:
    1) The NPV of Social Security has gone way, way up as interest rates have declined the last 30 years. Compare the amount of money to generate a risk-free return equivalent to the S.S. payout, and it could easily be 7-figures.
    2) Each year of life does not have the same value. Age 62 will have a different quality than age 82.
    3) In 2022, only 12 states will tax Social Security.

  16. Social security, the world’s biggest ponzi scheme! A system no one would participate in if it weren’t required and returns that make treasuries blush. Agree with your assessment Sam, best approach is to make enough that it doesn’t matter when you take SS. At 32yrs old SS just isn’t something to rely on. I always look forward to when I hit the FICA cap each year and get that cash in my check instead! And I swear the FICA cap has gone up way faster than 2% in the past few years….

    Love the site, great work as always Sam.

    1. “Social security, the world’s biggest ponzi scheme!”

      I do not think so. In a ponzi scheme people lose money, not so with SS.
      I will have everything that was paid in FICA taxes back in just 66 months. Most retirees receive all FICA taxes back in just 8 years. So, who is paying for all the years after the refund of your FICA taxes? Current workers and employers pay FICA tax, as it has always paid out SS benefits this way and everyone that qualifies gets a check. So, SS cannot be a ponzi scheme.

  17. Great article Sam. My take on social security, take it as soon as you are eligible. 62.

    Those incentives are placed there to keep you from collecting. They know the mortality rates. Get your money back from the government. The longer in terms of years you collect, the better.

    That’s how annuity companies make money by placing incentives (riders you will never activate). If you activate those guaranteed income for life riders at an early age, over time they make little money on you.

    What good does it do you to wait until 70 then go to heaven at 75.

    Collect longer periods and at the end it’s more $$.

    1. If you expect to die at 75, I agree. But a reasnably healthy man who is 62 can expect to make it to around 78, and a healthy man at 62 who is not overweight should make it to 82-83. Add 4-5 years for a woman.

      A common mistake is to claim while still working. This leaves your social security taxable if your wages are more than a pittance. If you are working and earning a reasonable wage you can afford to wait and probably should.


      1- If you have no job and no/low savings- claim now

      2- If you have a low wage job and no/low savings- claim now

      3- If you have a good/medium wage job- claim as soon as you are done working

      4- If you have high savings, wait until 70 regardless of the above

      5- If you are obese or a smoker, or have serious medical problems, ignore all the above and claim at 62.

      1. I was diagnosed with CHF at age 62, shortly after going from FT work to PT “consulting” work. Sadly, only 10% of the patients so diagnosed will be alive in 10 years. I’ve also long had Type 1 diabetes, which contributed. While I fully intend to stay as healthy as I can and be an outlier, I plan to defer claiming SS until 68 or 69 so my spouse will receive higher survivor benefits. She is my age but quite healthy, and will likely live into her late 80s if not beyond. I have a low seven figure IRA so we don’t have a pressing need for immediate funds, but as of now I plan to continue to work until 67 or so primarily since I enjoy my work.

  18. It depends on a lot of things. I’m not sure I would invest in anything, even now, with a 10 year break even.
    If you can survive without SS then I think, and will, take it as early as possible. The upside to delay, if you’re financially able to forgo it is nill…..don’t need it, may or may not leave more to your kids….which will be taxed. The downside is you die and get nothing on all you put in.
    I’ll take it and invest it or use it to gift (hopefully for investment) to my kids and grandkids as soon as I’m able. Add market returns and your break even become laughable.

  19. My dad died at 67 from cancer. Since then, I figured I’d start as early as possible and keep my taxable accounts and 401k as a reserve.

      1. This article has a profound effect on me. I am male and 73. I should not expect to live more than 7 years. I am definitely spending my money. As a disabled vet., if I run out of money, I think the V.A. Has to feed me. Hope so.

  20. Great BE example. Given how many folks underestimate how much they need to retire, I’d advise to leave it as a backup.

    Sure do wonder if we 30 year olds are ever gonna see a dime. As such, I don’t factor SS in my retirement projections.

    1. Honestly if youre rich SS doesnt matter. Suppose you retire with 5 million, and intend to live off the interest/dividends at 2%- so 100k a year of guaranteed income. It wouldn’t matter if you get SS at that point.

  21. Sam What if you invest the proceeds at 62, or 67 and get on avg 6-8%? How does that factor into the break even age and total amount received?

    1. If you get a 6 to 8% return a year, then you should actually come out ahead. Actuarially, when you take SS is supposed to be a net neutral overall for the system. But we are in the system. We are individuals.

  22. It is very likely that Biden will increase contributions in some manner, possibly something similar to the 3.8% levy on any income above $200,000 for singles. At some point he might as well just tax us 100% of our income and give us a monthly allowance to live; with anticipated rates approaching 60% in some states, the incentive to work becomes much less. It reminds me of my father’s story when he was 17 and began his first job. He was required to give his pay to his stepfather who then gave him a fixed weekly allowance. His employer could not understand why he never wanted to work overtime until he explained his home situation. Later his stepfather finally did permit him and his brother to keep any overtime earnings.

    I know many in DC complain about taxation without representation, but for those of living overseas, it is far worse. For many years I paid into Medicare but of course it provides no benefits overseas. I can collect social security but my non US citizen spouse is not eligible for spousal benefits unless she travels to the US at least one day per month.

    1. How about both of you guys just retired in America as a solution for her to get benefits? Where are you guys now and what are the benefits of living there versus somewhere in America?

      1. She is a doctor in Mexico who at her age, 49, could never practice in the United States as a result of archaic regulations. She would be required to pass several tests and repeat her residency. Her salary is about one tenth of the US but she has never wanted to leave her country and her family.
        Retiring in the US would be substantially more expensive not to mention she has no family or friends there.
        Given that the US is one of the only countries in the world that taxes worldwide income, you would think they would at least give the same benefits to Americans and their dependents anywhere they reside.

  23. I waited until full retirement age but we started my wife’s at 65. You have to also remember, before full retirement age, if you still have an income, it reduces what you collect from SS.

  24. If you don’t need the social security payment to live on, I think it’s a good strategy to take it early and invest it every month. The difference between 62-66 is a good head start in investing.

  25. I love the easily laid out “break even” calculation. Puts it out there in very easy to visualize numbers.

    It’s seems best, on average, to wait until full retirement age to take your benefits, but I can see a case for taking earlier based on how your personal accounts are doing as you get closer to retirement. We can de-risk as we get older by shifting out of equities, but there is no magic bullet. Knowing that the average annual return for the stock market is 8-10%, if there was a down year right before being able to take Social Security, I could see taking Social Security early as a “bridge” to be able to get your personal accounts to go back up again.

  26. Far as I could tell, I think I would have to live to 79 or 80 before taking it early would cost me money overall. Long before that (and before 2034), my rising investments should have rendered it trivial. Not that I won’t still take it if I can; as you say, it’s my money, whether some thieving Congress critter already spent it or not.

    Also, that 2034 date only gets closer and, while I don’t think it will end Social Security, I don’t know what it will do, consequently, none of my planning takes it into account past that date, nor on waiting until after that date to start.

    1. Yes, about 80 question minus a couple years is the break even point. Basically, the actuaries are following the median life expectancy data, which is around 80 years old.

      But the older I get, the more I think living to 80 seem so short. Damn, I really got to start living and I really got to spend more time with my parents.

  27. Like long term health care,no wrong, right (or easy) answer. We’ve decided to split the odds.

    Me take early 64( and cigar smoker), my wife later 68.
    Equal in age and wages, I’m retired, she has federal benefits at stake, will work till 64. Live in mid west..
    We’re both 62, net worth 1.7 million, no debt.

  28. Great write up and thank you for introducing me to the concept of the “strategic marriage” for the purpose of protecting social security benefits. That could be an interesting post on its own :)

    1. Yes, strategic marriage to protect both Social Security benefits is a good idea if you can find the right someone of course.

      But how screwed up is it that we must do this in order to get what is rightfully ours. The government should give us our money and let us allocated towards wherever we wanted to go.

      The government is making money off single and childless people who die before the age of about 78 years old.

  29. Great topic. Both of my parents struggled with this decision when they were in their 60s. I can’t remember exactly when they chose to start, but I know both ultimately went on the earlier end. They needed the financial support and both had health issues, so it was the better choice for them.

    Very smart on calculating the break even point. I would wager a lot of people don’t know how to do the math on that. It’s really helpful to see how to do the calculation to make the best informed decision.

    I’m not planning on Social Security being around when I retire, so if I do end up getting benefits in my 60s/70s it will be like an extra bonus.

  30. Thanks for this analysis-we appreciate your number crunching genius!! Some of your readers are probably in the same place we are-a good salary, medical plan, and an easy office job…would it make sense in this situation to keep working for the paychecks until 70?? Asking for a friend…

    1. If your friend loves her job, might as well keep on working and delaying.

      If you make the maximum income for maximum bike attacks for 35 years, you would get a maximum monthly Social Security benefit of around $3185. But if you wait until age 70, you will get closer to $3900. Not bad!

    1. This is what we are thinking. Two 60yr old’s looking to retire next year. My wife is the lower earner by far. It seems to me she should take hers at 62. When I take mine at 67, her amount should increase to a spousal benefit (minus some % because she started early).

      This strategy provides for her later (assuming I die first), yet gives her some income from 62-67.

      Was this your approach?

      1. Yes, our financial adviser actually recommended this approach. I retired at age 55 and my husband at age 63, and we didn’t plan to return to work to earn income. I started SS at 62 to hedge against neither of us drawing anything in the event something unfortunate happened. My husband’s SS would always be a little higher, so we let his grow until full retirement age. Whoever survives will always get the higher payout. We opted to enjoy the increased income while we were still healthy enough to travel and enjoy retirement together. Good luck on your upcoming retirement.

        1. I believe since you took your benefits early, if your husband passes first, you will not receive his full amount as his widow but his payment reduced by approximately 38%. Since you claimed early, your payments will be perpetually reduced by that early claiming penalty.

          1. That’s not my understanding. The yearly cash flow chart from my financial advisor shows my social security payment changing to my husband’s full amount should he die before me.

            ~2040 – $40,000 my SS, $55,000 husband’s SS
            ~2041 – $55,000 my SS, $0 husband’s SS (after his death)

            If I die first, he will keep his $55,000 SS but lose my $40,000 SS (and half of my pension)

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