Dear Rusty: My wife and I were talking to some other senior citizens who say it would be more beneficial to start drawing social security when I turn 67 next year, rather than wait till 70, even if I work full time. Can I do that? Signed: Working Senior
Dear Working Senior: Yes, you can do that, but it may not be your best strategy. Let’s explore your options:
If your wife is already collecting Social Security on her work record, you might consider filing a “restricted application for spousal benefits only” and collect a spousal benefit from your wife, while continuing to delay your claim for your own benefit, thus allowing your benefit to continue to grow. You can do this because you were born before 1/2/1954, which is the cutoff date for filing in this manner. In this way you could collect 50% of the benefit your wife is entitled to at her full retirement age (FRA) until such time as you file for your own benefit. If you wait until age 70 to file for your own, your payment will be 24% more than it will be when you are 67. But you cannot use this option unless, or until, your wife is collecting her Social Security benefit from her own work record.
There is no simple answer to when you should claim. It depends upon your current financial needs, your current health and your anticipated longevity (considering your family history). If you anticipate a long healthy life and don’t urgently need the money, then waiting until age 70 to claim your benefit will not only give you the highest possible monthly payment but also the most in lifetime benefits (assuming you live to at least the “average” age (84 for a man today). Waiting until 70 will also ensure that your wife gets the highest possible survivor benefit, should you predecease her (at her FRA, your surviving spouse gets 100% of the amount you were receiving at your death).
As for you working, since you’ve reached your full retirement age you no longer need to worry about Social Security’s “earnings test” which takes back benefits from anyone whose earnings exceed a certain limit. But it would be wise to consider that Social Security benefits are subject to Federal Income Tax (and, depending upon where you live, possibly a State income tax), so adding your Social Security income to your earnings from work could be an important tax consideration for you.
Claiming your benefit at age 67 will give you a payment which is 8% more than you would have gotten at age 66. But if the factors discussed above suggest you should wait longer, then you’ll earn an additional 8% for each additional year you wait to claim your benefit, up to age 70 when your maximum benefit is reached. What is the downside to waiting? Well, only that your wife, if she will be eligible for a spousal benefit from you, cannot collect that spousal benefit until you start collecting your own benefit. Your wife’s spousal benefit would be half of your age 66 benefit if she claims at her full retirement age.
So, as you can see, there is no easy answer to whether you should claim Social Security at age 67, but with the above information you should be able to make an informed decision. And here’s one final suggestion: don’t take Social Security advice from “armchair experts” and don’t be swayed by those who might say “collect now because Social Security is going bankrupt.” It’s not. It’s true that Congress needs to fix some portions of the program soon, and it’s also true they’ve been dragging their collective feet to do so. But, historically, Congress has always stepped up to the task when they had to, and I’m confident they will eventually do so again.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at [email protected].