The Social Security Norm That is Costing You Money

By now you know that I have long advised that it is smart for the highest wage earner in a household to wait as long as possible to begin claiming Social Security retirement benefits. If you wait all the way until age 70, your benefit will be 76% higher than what you are entitled to if you begin at age 62, which is the earliest year to claim retirement benefits.

Interesting new research surveyed retirees to learn more about why they chose a particular time to start claiming their Social Security benefit. It turns out that many people simply tie their claiming decision to when they retire. So, if someone retires at 65, they are more inclined to start receiving Social Security at 65, rather than wait.

I want you to fight the urge to follow this “social norm.”

If you are in good health, you should never claim your Social Security benefit before your Full Retirement Age (FRA) which is somewhere between 66 and 67 depending on your birth year. At your FRA you are entitled to 100% of your earned benefit. But to repeat myself, if you wait until age 70 your benefit will be 25% to 30% higher.

Even if you retire before your FRA, or age 70, I don’t want you to touch your Social Security. Rely on other assets, such as your 401(k) and IRAs rather than grabbing your Social Security benefit. Or work part time to bring in some income. The extra 25% to 30% you will get by waiting until age 70 is a risk-free return that can’t be beat.