Claiming Social Security Early: Now or Wait?

Claiming Social Security Early: Now or Wait?

For many soon-to-retire households, the timing of when to take Social Security benefits is an important choice. David Freitag, a Social Security expert with Mass Mutual, says that if you calculate the present value of a couple’s monthly benefits, it could exceed $1 million.

People are living longer and spending more. As a result, they need to know how their benefits really work, according to Freitag.

And it’s largely due to longevity risk, as the head of MassMutual in the U.S. explains: “This is not a retirement planning conversation. This is a longevity planning conversation, and near-retirees have the power and responsibility to ensure that they protect and receive every dollar they deserve in Social Security retirement benefits when the time comes.”

Even so, a large number of people take Social Security benefits before their full retirement age. In doing so, they may begin receiving income from Social Security sooner. But there are trade-offs, which vary depending on just how early you start benefits.

Early Social Security Claiming: A Question of Now or Later?

Do you remember the “Marshmallow Experiment?” In the 1960s and ’70s, then-Stanford professor Walter Mischel and his team set up an experiment to measure our ability to delay gratification. Their research subjects—ages 4 and 5—were put to a simple, but for some excruciating, test. The children were presented with a single marshmallow on the table in front of them and given two choices:

  • When the researcher left, they could eat the marshmallow.
  • But if they waited until the researcher returned, and the tantalizing marshmallow was still there, they would be rewarded with a second marshmallow.

It was a fascinating window into taking a benefit now or delaying “gratification” for a greater benefit later.

Social Security and the Marshmallow Conundrum

It would seem there are similarities between the Marshmallow conundrum and the conundrum that faces people planning for retirement: When to begin taking their Social Security benefits. It could be seen as the adult equivalent of the question, “Do you want one marshmallow or two?”

Timing the start of Social Security benefits is certainly one of the most important choices people will make. It will affect the payout they will receive for the rest of their lives. Your benefits become available to you when you turn 62.

But if you claim them before your full retirement age, or FRA, your benefits could be reduced by as much as 30%. And this reduction in benefits is permanent. That means your monthly income during retirement could be hundreds of dollars lower than if you had waited.

Another downside of claiming benefits early? You could miss out on earning delayed retirement credits that accrue until age 70 when you wait to claim benefits. For example, if you were born in 1958, your FRA is 66 and 8 months. If you start receiving benefits then, you are entitled to 100% of your monthly benefit.

But delay taking benefits until age 70 and you’ll get 126.7% of your monthly benefit, according to calculators on the Social Security Administration website, When you reach age 70, your monthly benefit stops increasing even if you continue to delay taking benefits.

Will you begin taking your benefits as soon as you are eligible— at age 62? Or will you delay their start and build up a larger benefit? It seems many people are opting to take their money as soon as they can, permanently reducing their lifelong payout. So, what is driving this “one-marshmallow” mentality?

Why is 62 is the Most Popular Age to Begin Social Security?

The decision to start taking Social Security at age 62, or close to it, is often based on need. While someone might choose to work until their full retirement age, or even until age 70 so they can earn delayed retirement credits, circumstances don’t always allow this to happen.

Research from the Employee Benefit Retirement Institute shows that 40% of workers want to wait at least until age 70 before retiring, while just 26% want to retire before age 64. But desire and reality are quite different. The Institute reports that only 4% of current retirees were able to work until age 70 and beyond. A whopping 77% of current retirees left their employment before their 65th birthdays.

Of those leaving the workforce, about 25% did so because they could afford to retire. The rest were:

  • a) forced out due to company restructuring that left them without a job,
  • b) faced health problems, or
  • c) suffered a disability.

Poor Health is a Motivator for Claiming Social Security Early

Yes, claiming early can reduce your monthly benefit. But what if you have serious health issues that may affect your longevity? While there is no crystal ball revealing the future, if you are in poor health or have a family history that indicates a shorter lifespan, exploring early claiming could make sense.

If you delay benefits you are missing out on years of income, so how do you know your break-even point? This is defined as the point when the extra monthly income from your larger, delayed, benefit equals the benefits you lost by waiting to claim.

Once you’ve reached the break-even point, you have made up for the years of missed benefits. Work with a financial advisor who is knowledgeable in combining Social Security planning and retirement planning to get this calculation customized to you. This may help you uncover your Social Security benefits break-even point.

Fear that Benefits Won’t Last Fuels Early SS Claims

For years, pundits have doubted that the Social Security system could stay healthy enough to fund the benefits of generations of Americans, whether retired and not-quite-there-yet. Take, for example, just the masses of baby boomers, who for some years have been retiring at a rate of 10,000 a day. With other generations on the horizon — such as the oldest members of Gen X going into their 50s — the concern is real.

This fear is felt by 3 out of 4 future retirees. They worry that Social Security benefits will run dry before they can collect what they are due. Social Security retirement benefits are funded from two sources: payroll tax contributions from current workers and the Social Security trust fund.

Here’s an update from “The Future Financial Status of the Social Security Program,” a Social Security Bulletin found on

“The Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits… This shortfall is basically stable after 2035; adjustments to taxes or benefits that offset the effects of the lower birth rate may restore solvency for the Social Security program on a sustainable basis for the foreseeable future.”

Most politicians realize that Social Security recipients represent a large voting block. So, as in the past, they are likely to step in with legislation to solve any shortfall issues.

Get All the Marshmallows You Have Coming to You

It’s a sad truth that many people put more time into planning a vacation than they do their retirement and post-retirement spending plan. Don’t make that mistake or be one of them.

Now that you know you have options—and that choosing when to begin taking Social Security benefits is a complex question dependent on your unique circumstances—coordinate your Social Security strategy with the rest of your retirement plan to optimize your finances.

Working with a financial professional can help you breathe easier. You can find yourself in a better position to enjoy the lifestyle you and your partner have worked your many years to attain.

Want Guidance with Maximizing Your Retirement Income?

As you formulate or refine your retirement income plan, you may seek personal guidance to make the most of your retirement dollars. Research and studies have shown that working with a financial professional can make a difference. Higher savings, better-quality financial wellness, and a higher sense of overall well-being are some outcomes that retirement savers have reported as the result of professional financial help. 

If you are ready, financial professionals at can assist you. Connect with someone directly by visiting our “Find a Financial Professional” section. Should you need a personal referral, please call us at 877.476.9723.

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