Social Security: When to Apply

When Should You Apply for Social Security?

More and more of my friends and clients are reaching “retirement age” for Social Security. The question is whether you should apply for your benefits at age 62, “normal retirement age”, or age 70. I can tell you one thing for sure…there is no benefit at all for applying for your benefits later than age 70. Your benefit amount substantially increases each year that you wait to start taking your benefits, but it stops increasing after age 70.

I’m reading through a book on Social Security titled Get What’s Yours…The Secrets to Maxing Out Your… I will share a few things I’ve learned so far. The authors strongly suggest that you wait to receive your benefits until age 70 to get the greatest benefit. I have come to the same conclusion over the years after making calculations for clients. I had plan to wait until age 70, because assuming I die first, my wife will receive the greater of her Social Security benefit or mine. Mine will be greater than hers, so waiting to age 70 to claim my benefits, she is left with a much larger monthly benefit.

Monthly Benefit Calculation

Another interesting fact I learned was how our monthly benefit is calculated. They start by taking our highest earning years out of 30 years. If you do not have 30 years of earnings, then the remaining years are counted as zeros. On your annual benefit statement, you will see a statement that the projected benefits are based on you earning the same earnings each year as you did the latest year until you start taking benefits. Keep that in mind if you have a really big income year in the latest year and that amount will not continue in the future. It is also important to keep your earnings as high as possible through retirement, especially if you have more than 30 years of high income years.

I have much more of the book to read. I am hoping to be an expert on Social Security benefits by the end of it!