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Council Post: Navigating Social Security Benefit Timing



Jerry Patterson is President of Fidelity Investments Life Insurance Company, a division of Fidelity Investments.

There are three key questions every pre-retiree should be asking themselves:

• When should I consider taking Social Security?

• How do I transition to Medicare?

• How should I be thinking about, and planning for, long-term care risk?

These are the questions I’ll be exploring in the Essential Pre-Retirement Series, a three-part series that will dive into each of these topics—starting with when you may want to consider taking Social Security.


I have spent hours scouring various social media sites where everyday people—and in some cases—experts were discussing Social Security benefits planning and the timing related to claiming benefits specifically. I was surprised to discover a significant amount of disagreement around the topic.

There appear to be two primary schools of thought:

• Wait And Collect The Most: The “wait to maximize benefits” approach focuses on maximizing the dollars of Social Security benefits you can receive over the rest of your expected life.

• Take The Money Early And Enjoy: This more emotional approach focuses on the value of having the money sooner and being able to enjoy one’s earlier retirement years more with the extra cash.

The “experts” I came across in my research seemed to push the benefit maximization approach most of the time. The everyday people that I stumbled upon seemed to have a heavy bias toward taking the cash as early as they could to help during those earlier “Go-Go” years of retirement. They use it to pay bills, fuel a desire to travel or pay for all the golf or pickleball gear they may desire to purchase. In addition, there is the fear among some that they may not live as long as the expert’s project.

There are three important ages to consider as you think about how to claim your Social Security benefits: 62, 67 (or younger if you were born before 1960) and 70.


• 62 is the earliest age you can claim benefits.

• Your “full retirement age” is the age at which you will receive 100% of your benefits, and it’s based on the year you were born. For those born after 1960 for instance, the full retirement age is 67.

• 70 is the latest age you can begin claiming benefits.

Social Security benefits claimed at the earliest age of 62 are 30% lower than when waiting to claim them at a full retirement age of 67. They could be at least 24% monthly higher when that same person waits until age 70.

Based on pure mathematics—and assuming you will live a normal life expectancy—many experts will tell you to work as long as you can and wait until the latest age of 70 to claim your Social Security to maximize the benefits you will receive. This is especially true if you have other sources of income to cover your expenses and do not need the cash. If you are done working for good, could use the cash, fear legislative changes or have health issues or a family health history that suggests shorter longevity, then taking the money sooner may make more sense for you to consider.

Only about 10% of eligible recipients wait until 70. Another way to look at this is to calculate the break-even point where the value of waiting outweighs taking the money early. Let’s say you’re 60 and the break-even age is 68. In this example, if you believe you will live to be 68 or older, you may be better off waiting longer and maximizing your benefits versus taking the money at 62.

In my own life, I am leaning toward taking the money early and enjoying the value it creates in my early years of retirement. I suspect my financial advisor is going to push me to consider and appreciate the math. I bet he will encourage me to maximize the benefits I can receive over my projected lifetime. However, I have many hobbies, interests and curiosities that could be better supported in my “Go-Go” retirement years with the extra cash.


I am not sure I will benefit as much in my 70s by having a little extra cash as my “Go-Go” lifestyle may begin to slow down. With that said, I have an 85-year-old mother-in-law who has not stopped “Go-Going” since the day she retired, so you never know.

The bottom line is that there is no “right” answer relative to claiming Social Security. It’s a deeply personal journey, and I think it’s important to think about both the mathematical and emotional implications of waiting versus taking the money earlier.

Please stay tuned for the next installment of this series focused on transitioning to Medicare.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Views expressed are as of the date indicated and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the author, and not necessarily those of Fidelity Investments.

Fidelity Brokerage Services LLC, Member NYSE, SIPC 900 Salem Street, Smithfield, RI 02917

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?


Source: Forbes

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