Kathy Healy

Hi, I’m Kathy Healy, managing partner of Healy Wealth Management. Today, I’m here to answer an important question that I hear from clients a lot. When is the best time to start taking Social Security?

Most of the time people mean, “What is the biggest monthly payment I can get out of Social Security?”

But I think a better way to look at it is what is the largest cumulative amount you can get over your lifetime through taking Social Security? An important age that you need to be aware of is what Social Security calls your full retirement age.

If you were born after 1960, your full retirement age is 67. This is going to be the main number that I talk about today. Another number I’m going to talk about is 8%. 8% is how much your Social Security benefit will grow for every year you wait to start your benefits after you’re 67 or the full retirement age.

For my own example, when I compared my benefit at age 67 versus age 70, it’s the difference of $1,100 a month. This ads up  to more than $13,000 a year, which is a big difference. The longer you wait, the bigger your monthly payment will be. On the other side, every year that you start to take Social Security before your full retirement age, you’ll get 8% less of your monthly benefit.

You can start taking Social Security as early as age 62, or you can wait as long as age 70. So how do you decide? An important factor to know is how long you’re going to live. Unfortunately, that’s something we really don’t know. The breaking even range for Social Security is about age 80, 81, and 82. If you think you’re going to live that long, it would be worth it to wait until age 70 to start taking Social Security.

If you have longevity in your family history, then you’ve got a good chance of living past 81 or 82 years old. If, for some reason you are not in the best of health, or you’re not optimistic about your longevity, you might want to start taking your social Security payments earlier. Remember, with every year earlier than your retirement age in which you start taking your benefits, you’re going to decrease your payment by 8%, and it really adds up.

Another important thing is whether or not you’re still working. If you hold out until that full retirement age, there is no earnings test on how much you’re earning and taking Social Security. You could still be working after age 67 and get your Social Security benefits without having any type of penalty.

But if you’re still working and you take your Social Security benefits before your full retirement age, there is an earnings test. The earnings test in 2024 is a little more than $22,000 a year. So if you’re earning more than that, and you’re less than 67 years old, you would have to pay back some of your Social Security benefits.

But once you reach that full retirement age, you can earn an unlimited amount of money and not have to pay any back. Another important thing to note is that if you’re divorced and your ex-spouse had a better earnings record than you, you could be eligible to base your Social Security benefit on your ex-spouse’s record. It won’t hurt your ex-spouse and it won’t hurt your spouse’s family. It won’t impact them at all. It’s just that you will be eligible for the larger benefit.

If you’re divorced and not remarried when you apply for Social Security, they will ask for your ex spouse’s information and they’ll compare and help get the best benefit for you. I can also give you a lot of information about averages and what works for most people.

The most important information I could give you would be something that is specific to your own facts. If you wanted to provide me with your Social Security statement, I’ll be able to do a customized example for you based on your own information. We just want to help you optimize this decision for yourself.

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