“What’s the best age to file for Social Security?”
This is the number-one question people ask me about Social Security.
And it’s little wonder because the answer is anything but simple or straightforward. In fact, finding the right answer for you often requires a lot of complex thinking and calculating to determine exactly what you should do.
Even if you can manage to do the proper planning on your own, then you’re left with an almost-bigger challenge: feeling confident that you got to the right answer.
You can do the hard work of making your best estimate… only to spend a lot of time and energy worrying and second-guessing yourself.
“What’s the best age to file for Social Security?” is the question that trips up most people more than any other in planning for the retirement you want. So let’s get to the bottom of this, and to an answer you can use, together.
You may also be interested in my video Working While Collecting Social Security
How Your Filing Age Affects Your Social Security Benefit
Filing early, or before full retirement age, wasn’t even an option back when Social Security started. When the benefit was first introduced, the retirement age was set at 65.
There was no question about the best age to file for Social Security back then.
In 1956 women were offered reduced benefits as early as age 62. An amendment followed in 1961 which extended that offer to men.
Here’s how it works today:
You are entitled to your full Social Security benefit at your full retirement age. Full retirement age ranges from age 66 to age 67 depending on your year of birth.
You can also file earlier if you want — but if you choose to file early for Social Security, your benefit will be reduced. The flipside is that you’ll likely receive checks for a longer period of time.
If you file later than full retirement age, you’ll receive a higher benefit than you would have at full retirement age. You’re also likely receive fewer checks in your lifetime.
I’ve made a video which covers this topic visually. Check out How to Easily Calculate Your Social Security Benefit for Any Age Between 62 & 70
What Does the Data Say About When You Should File for Social Security?
At the end of the day, when you should file for Social Security is a highly personal decision that depends on a number of individual factors unique to your situation, life, and finances.
But still, it helps to have some guidelines. Thankfully, some common sense knowledge on financial and retirement planning can paint a pretty clear picture to answer the question of when is best to file.
If you have adequate retirement savings and a good handle on your retirement expenses, it generally makes sense for at least one person to delay filing if you’re married.
But according to a recent report from the Center for Retirement Research at Boston College, around 60% of American begin collecting Social Security retirement benefits before full retirement age. Nearly half began at 62, which is the earliest age possible to file for benefits.
There’s no way that filing at the earliest age possible was the right strategy for nearly half of all 62-year-olds. So why do so many people file so early for Social Security?
Many people make these poor choices in their filing decisions because of something called hyperbolic discounting.
Hyperbolic discounting is a cognitive bias which leads individuals to accept a smaller reward today instead of waiting for a known larger reward later. This bias becomes stronger when the reward is closer to us (as opposed to farther into the future).
Imagine you are offered $50 today or $60 a week from now. Research around hyperbolic discounting usually finds that most individuals would choose the $50 today.
But when the option is to wait 52 weeks to get $50, or wait 53 weeks to get $60, most choose to wait the 53 weeks for the higher reward. The behavioral thought is, “I’m already waiting a year; what’s another week?”
Hyperbolic discounting is easy to observe in retirement planning.
You can build the perfect retirement plan with an optimal retirement income strategy. The client, when they’re still in the middle of their career, agrees that filing at a certain age is best.
But as clients begin to approach age 62, they start to waver on that initial decision (which was strategic and logical). Often, they just file as soon as they turn 62 due to the hyperbolic discounting bias that leads to illogical, irrational decision-making.
When someone is offered $1,540 per month today or $2,728 per month starting in eight years, it’s just too tempting to start accepting the money today instead of waiting.
We’d all like to believe that we make decisions based on the facts and not emotions. When it gets right down to it, though, our emotions can and often do take over. That leads to decision-making that doesn’t provide the optimal outcome, and it’s why so many people file too early for Social Security benefits.
So how do you overcome this challenge?
Using a Breakeven Analysis? Stop! Read This First
You should arm yourself with the facts on who should file, and when, if you want to know the right steps that you need to take.
But before we can get into what the best age for filing is for you, we need to talk about why you must avoid using a breakeven analysis.
For years, this was the preferred method of identifying the ‘right’ age to file. At one time, the Social Security Administration had a breakeven analysis on their website! Thankfully, they’ve since taken it down.
This old-school approach to figuring out when to file only takes into consideration your life expectancy and completely ignores the other factors that should be part of a filing decision.
A breakeven analysis simply compares your total cumulative lifetime benefits amounts for filing at various ages.
For example, if you started collecting benefit at an earlier date, and die before reaching the breakeven age, you come out ahead. If you live beyond your breakeven age, you would have been better off to have filed later.
Check out the chart below. You’ll see that age 78 is the ‘breakeven’ between filing at 62 vs. 67.
In other words, it’s this point when you would have been better off to have waited until 67 to have filed. If you died before 78, you would have been better off filing at 62.
In comparing age 67 vs. 70, you would have to live past age 82 for it to be beneficial to have filed at 70.
The question the breakeven analysis answers is, “What if I die early?” This question is such a small part of the filing decision. It only considers your benefit amount and completely ignores the optimization of spousal and survivor benefits and the role your benefit amount may play in their lifetime.
A real analysis to determine your filing strategy should not only consider what happens if you were to pass away, but also ask the question, “What if I live longer than expected?”
What Is the Best Age for You to File for Social Security?
There are at least 12 factors that one should consider when choosing when to file for Social Security.
Your decision about when to file for benefits begins with your gender. This decision is more important for women than it is for men. There are two reasons for this: (1) Women live longer than men. (2) On average, Social Security makes up a greater percentage of a woman’s retirement income (47%) than it does for men (where Social Security accounts for 34% of their income).
- Marital Status(es)
If you had prior marriages, how did they end? Divorce, death, or annulment? Are you eligible for benefits from any of those past marriages that could boost your own benefit?
- Contribution to Income
What’s the importance of your Social Security income relative to your overall income? If a large part of your income will come from Social Security, you might not be able to enjoy as much flexibility in your filing strategy.
- Children’s Ages
Do you have minor children at home? If so, they could eligible for benefits once you file. Grandchildren could be eligible, as well, if both biological parents are deceased or disabled or if you have adopted them.
If you are disabled, or think you may meet the criteria, filing for Social Security disability at age 62 could make a lot more sense than filing for retirement benefits. This is because you disability payment is 100% of your full retirement age benefit. Filing for disability will also enable your eligible beneficiaries to receive a benefit.
- Your Health
If you have a condition that could lead to a shortened life expectancy, that should be part of the decision process. If you’re single, it may mean that you file for benefits as early as possible in order to get all the payments you can. If you’re married, you’ll have to balance the impact of leaving your spouse a smaller benefit (if you file early) or a larger benefit (if you file later).
- Spouse’s Health
If your spouse is in poor health and is unlikely to outlive you, delaying your benefit strictly for the purpose of increasing their survivor’s benefit doesn’t make sense.
- Spouse’s Age
If your spouse is younger than you, it could mean they would receive a survivor benefit for more years than you, the older spouse. Delaying your benefit would increase the survivor benefit they’d receive for those extra years. If your spouse is older than you, they may not be able to collect a spousal benefit until you file. This means if your need the extra income, filing early could increase the total monthly benefit.
- Other Assets
You’ll have more options if you have ample retirement savings. This will allow you the flexibility to take income from one source while you wait for your Social Security to increase.
- Other Income
If you have other retirement income, like pensions, you can be more flexible with your filing strategy. Filing later may make more sense because you may not necessarily need Social Security in the first years of retirement thanks to your other income sources.
- Tax Scenario
If your taxable income is on the edge of making your Social Security taxable, you need to exercise caution in your filing strategy. The wrong decision about when to file could push your Social Security income into a bracket where up to 85% of your benefit is taxable.
- Employment Status
Do you plan to continue working? If so, you need to be aware that working before full retirement age may completely turn off your Social Security benefit. If you plan to work after full retirement age, it offers you flexibility in filing strategy.
Considering the factors above is the starting point to understand which strategy is right for you. To further help you understand when is best to file, let’s look at some different scenarios and what each case means for determining whether to file early, at retirement, or late.
When You Should File Early for Social Security
Although it’s less common, filing early can be the best strategy for some people.
Bear in mind that even if one of these scenarios aligns with your own, filing early may not be an option if you’re still working. The Social Security Administration has an earnings limit that is applied if you are less than full retirement age and working while collecting benefits.
Here are a few cases where it could make sense.
You need the income
There’s not much strategy here. If you need the income because of job loss or some other factor, you need to go file.
However, if the income deficit is coming from a disability, you may need to consider filing for Social Security disability instead of retirement benefits.
Why? The retirement benefit is 70% of your full retirement age benefit. The disability payment is 100% of your full retirement age payment.
I wrote an article about this topic titled Should you file for Social Security Disability or Retirement? 3 Things to Consider if you want to learn more.
You have minor or disabled children
If you have children (or eligible grandchildren) or a spouse providing care for these children at home, they may be eligible for benefits. You may have to file first, though.
This is because a rule that states that before benefits can be paid to anyone off of your work history, you have to be receiving benefits.
When combined with your benefit, the benefits to children and your eligible spouse can be up to 180% of your full retirement age benefit. So if you have children at home that meet the criteria, there’s an obvious reason to consider filing early.
To read more about benefits available to your family, check out my video Social Security Family Benefits: Who Gets What & How Much.
You are the lower earner and your spouse is in poor health
If your spouse had higher earnings than you, their benefit will be higher than yours. If they are also in poor health with a shortened life expectancy, it’s likely that your benefit will terminate and you’ll simply begin receiving their benefit as a survivor.
Since you’re not planning for years into the future, it’s not likely that by delaying your own benefit would ever break even in cumulative payments.
Your spouse is the lower earner and older than you
If your spouse is older than you, and their own benefit is not as high as the amount they can receive as a spousal benefit, it could make sense to file and open up your work record to pay a spousal benefit.
When you compare the total amount of benefits you both could receive, this strategy could make more sense than you delaying your own.
You are entitled to both survivor benefits and your own benefits
While this strategy is highly dependent on the math, it could make sense to file for your survivor’s benefit as early as 60 and switch to your own benefit later.
See my article Social Security Survivor Benefits: The Complete Guide to Who Gets What and How to Calculate It to familiarize yourself with the rules you must understand if you might be eligible for a survivor benefit.
When You Should File Later for Social Security
Absent one of the factors where it makes sense to file for benefit early, you probably just need to file later. Then the question becomes, how much later?
Again, that depends on your unique situation, but one thing should be clear: retiring and filing for Social Security does not have to happen at the same time. It may be optimal for you to file for benefits years before, or after, you leave work.
If you’re still thinking about filing early, without one of the aforementioned reasons, here are a few other things to think about.
The return is good (really good)
Imagine you heard about an income-producing investment backed by the US government. They’re willing to pay you today, but they have a special deal for you to consider.
If you just delay receiving payments for 8 years, they’ll increase your lifetime monthly benefit payment by as much as 77%.
Do you think you’d be interested?
That’s exactly what you can enjoy when you delay your Social Security benefit. If you wait to file for Social Security until age 70, your benefit will be 77% higher.
This fantastic increase in benefits is often underestimated by individuals who file early for benefits even if they don’t need the income. They’ll often file and then just let the monthly checks pile up in their bank account.
I’ll bet that bank account won’t increase by 77% in 8 years.
It’s like a life insurance policy
The thought “I need to go ahead and file! What if I die early?” is often quoted as the rationale for filing early by the men in my office when planning for their own retirements.
My response is often, “You probably will die early — and that’s exactly the reason you should think about filing later.”
Your eventual survivor benefit will be what’s left behind. Wouldn’t you rather leave behind a higher amount? The difference in you filing early or late could be the difference in your surviving spouse being able to live well or just survive.
You could lower your overall tax bill in retirement
Somewhere between 0% and 85% of your Social Security benefits will be added to your taxable income. It could make sense to delay filing to reduce these taxes in retirement. This won’t work for everyone, but for those in the right income bracket it could make a big difference.
In order to determine how much of your of your benefit will be taxable, you first have to calculate “provisional income” – a measurement of income used specifically for this purpose.
Provisional income can be roughly calculated as your total income from taxable sources, plus any tax exempt interest (such as interest from tax free bonds), plus any excluded foreign income, plus 50% of your Social Security benefits.
Assume that you need $4,000 per month in income. Your Social Security benefit at your full retirement age is $2,000. This means that you’ll need $2,000 from other sources such as retirement accounts.
What if you took the entire $4,000 you needed from your retirement accounts until you reach age 70? Then, you could switch on your Social Security benefit which would be $2,480.
Now you only need $1,520 in monthly distributions from your retirement accounts. Since only half of your Social Security is counted in the provisional income calculation, the overall provisional income should be reduced. That results in less of your benefit being taxed.
All this being said, your tax advisor is the best resource for recommendations on a tax plan for retirement and Social Security, so be sure to touch base with them and talk through the specifics of your situation before making a final decision based on tax benefits.
How to Find Help
In this complex conversation on Social Security and the best age to file for benefits, one thing stands out very clearly: there’s no one-size-fits-all answer or rule of thumb for Social Security filing.
(Not even this article covered all the factors you need to know in order to make a great decision.)
So what should you do next?
If you’d like to get some help in making your decision, I’d suggest you find a qualified financial planner. Finding a financial planner who deeply understands this issue, however, isn’t always easy.
There are no legitimate education programs that teach financial planners what they need to know in order to help clients with Social Security, so you can’t look for a specific certification or designation.
It’s up to you to find out if a particular planner is passionate enough about the topic to have sought out and developed specialized knowledge in this area, and taken the time required to learn all the ins and outs of Social Security and the filing rules.
There’s only one way to do that. You need to ask lots of questions!
One of the first questions you should ask is,”Do you offer financial planning on an hourly basis?” This is the only way I would consider engaging someone to help you.
If they say they don’t charge anything and will help you with your planning for free, there’s a strong likelihood that’s because a sales pitch for a financial product like insurance or annuities is coming at some point during the process of “helping” you.
Once you find a planner who will help you on an hourly basis, it’s time to find out what they know about Social Security. A good question to get started with would be the very one we sought to address here: “What’s the best age to file?”
What you’re hoping to hear is not some rule of thumb answer (e.g. 67 years old). They should ask you a few follow up questions that will help them determine the specifics of your situation. If they give you an easy rule of thumb answer, they don’t know Social Security beyond a surface level.
If they do okay with that question, here are a few more questions you can ask:
- What is my full retirement age?
- How much will my benefit increase between age 62 and my full retirement age?
- What are the length of marriage rules?
- How does work affect my benefit?
- Can you explain provisional income?
These are very basic questions that any financial planner with competency in Social Security will be comfortable and confident in answering immediately.
If they can’t, keep looking! If you are diligent in your search, you’ll find the help you need.
Remember, this is YOUR retirement and you need to take charge of it!
One of the best ways to be in charge of your retirement plan is to engage in self education. There are some excellent books on the market now that are designed specifically for those in your situation. They are not heavy literary works but easy readers that contain valuable pieces of information that can help you make great decisions, keep you protected and potentially change the trajectory of how you spend the best years of your life.
I’ve culled through many of the books available and curated a list of books that anyone should read who is getting ready to retire.
Check out my recommended retirement planning books now.