A Wealth Of Common Sense: At What Age Is It Smart To Start Claiming Social Security?

In a new blog post, A Wealth of Common Sense’s Ben Carlson tries to clarify the options for retirees when it comes to taking their Social Security benefits. For more than half of Americans aged 65 or older, Social Security makes up at least half of their income needs.

The full retirement age (FRA) for retirees born between 1943 and 1954 is 66, but it will gradually rise to 67 for those born in 1960 or later. That means if you are 56 years old or younger, your FRA could be as high as 67. Americans that begin to claim benefits at their FRA are eligible to receive the Primary Insurance Amount (PIA) of their Social Security benefits.

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However, there is some flexibility in when you can begin claiming your benefits. If you claim early (as early as age 62) you can receive as little as 70 percent of your PIA annually. If you wait until age 70, however, you can receive 132 percent of your PIA.

Carlson noted that the average life expectancy for a 62-year-old female is 84.7 years, and for the average 62-year-old male its 81.8.

“In other words, from a breakeven perspective, most unmarried retirees will be best served by waiting to take their retirement benefit,” The Oblivious Investor’s Mike Piper explained.

Carlson noted that, while waiting until age 70 to claim your benefits might be the correct decision on paper, it’s not such a simple decision in real life.

“I always think it makes sense to keep your emotions out of financial decisions, but people don’t live their lives in a spreadsheet,” Carlson acknowledged.

“In retirement you always have to weigh the costs and benefits of your need for portfolio growth in the future and your desire to enjoy yourself—and your money—in the present,” he concluded.