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When should I take Social Security?

Feb 1, 2022
Empower Insights

Timing can have a major impact on how much you receive over your lifetime

You can start collecting Social Security checks as early as age 62 and as late as age 70. The longer you wait, the higher your monthly benefits will be, possibly by several hundred dollars. What's more, higher monthly benefits tend to result in higher cumulative benefits over the course of your retirement, even if you start collecting them later.

So, does that mean you should wait until you're 70? Probably, but not necessarily.

Here's why it usually makes sense to wait to receive Social Security — and why in some cases earlier is better.

The case for waiting until you're 70

To understand the impact of waiting longer, it helps to look at an example:

Someone born in 1957 has a full retirement age of 66 years and six months. Say their monthly benefit, based on their lifetime earnings, is $725 if they start collecting Social Security at age 62.

  • If they start collecting four and a half years later, at their full retirement age, that figure jumps to $1,000, or almost 30% higher.
  • If they wait until they're 70, their monthly benefit will be $1,280 — 28% more than at their full retirement age and 77% more than at age 62.

In other words, if this person waits until age 70 to start collecting Social Security, they’ll have a full $555 more to take home each month than if they’d claimed their benefits at age 62.

Another factor to take into consideration is whether you plan to work in retirement. You can work and still collect Social Security. However, if you begin taking payouts before your full retirement age, your monthly benefits will be reduced if your income from work exceeds a certain threshold. As soon as you reach full retirement age, though, your benefits will not be reduced — no matter how much you earn from your job.

The decision about when to start taking Social Security could also have a major impact on your spouse's income. For married couples in which only one partner works, the non-working partner may be eligible for Social Security, but their payouts will be higher the longer their spouse waits to file. The same goes for surviving spouses who are entitled to their deceased partners’ benefits.

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When it's better to start collecting earlier

The longer your life expectancy, the more sense it makes to wait to collect Social Security. Those in poor health or with a family history of shorter-than-average lifespans should consider claiming earlier rather than later.

Others may need Social Security checks to help cover basic living expenses. If you're in a position in which you need the money at age 62, it doesn't make sense to wait, regardless of the potential for higher payouts down the line.

Another scenario in which earlier may be better: If you and your spouse both work, but your spouse's earnings are higher, you might consider claiming benefits at or around full retirement age while your spouse waits until age 70. That way, you'll have some additional income earlier in your retirement but still benefit from bigger checks down the road.

How much do I need in retirement?

Ultimately, how much you need in retirement is up to you and the lifestyle you hope to have. Some professionals suggest you’ll need about 80% of your current earnings to cover your cost of living in retirement. For example, if you bring in $80,000 right now, you may need $64,000 per year when you’re retired.

Whether you settle on 80%, 100% or in between, don’t forget to factor in your estimated Social Security benefits, and any personal sources of income, when doing the math and evaluating your situation.

Empower’s retirement calculator can help you determine how much money you might need to fund your golden years.   

Once you’ve entered the required data, which includes your retirement accounts, outside assets, savings goals and investment strategies, the tool will show you your retirement income projection and provide tips for closing any gaps. If your results aren’t quite what you thought they’d be, don’t worry. Seeing where you stand today, and following your next steps, can help you make progress toward your tomorrow.

Save in an Empower Premier IRA to help achieve the retirement lifestyle you imagine


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