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Filing for Social Security

Filing for Social SecurityThere is much debate as to whether it is prudent to file for Social Security payments as soon as possible or wait until the age of 70 to maximize the payout. Furthermore, most people don’t know where to start when the time comes to file for Social Security.

Let’s take a closer look at filing for Social Security.

What is Your Social Security Full Retirement Age?

If you were born between the years of 1943 and 1954, 66 is your full retirement age. This age gradually moves up to 67 if your birthday is between ’55 and ’59. If you were born in 1960 or after, 67 is your full retirement age. It is possible to claim Social Security benefits a couple years prior to or after the full retirement age. The timing of the claim determines the monthly benefit amount.

Furthermore, you will only be eligible for Social Security if you have earned a minimum of 40 “credits” during your working career. However, it is possible to earn up to four credits per year, meaning it merely takes a decade of work to qualify for Social Security. Your Social Security benefits hinge on the 35 years during which you earned the most in wages or salary. Those who have less than 35 years of earnings face the prospect of their non-earning years being factored in at a zero figure.

To Wait to File or Not Wait to File…That is the Question

Filing for Social Security might not make sense if you are in your early 60s and have minimal savings. Though you can technically collect Social Security at age 62, doing so might not be in your best interest as your payout will be comparably small. Sadly, taking Social Security prior to your full retirement age spurs a payout reduction between 25% and 30%.

Alternatively, if you wait until age 70 to claim Social Security, you will receive the maximum payout based on your earnings. Delay your claim until full retirement age and your benefit will expand by 8% each year all the way up until the age of 70. Furthermore, cost-of-living adjustments will also be factored in, ensuring you do not lose out on those adjustments while you continue to work rather than claiming benefits as soon as possible. This choice is not free from risk however. By delaying your benefits, you are leaving money on the table. It takes years of collecting the larger monthly benefit to make up for the years that you elected to delay taking your benefit.

Waiting to Claim Social Security Has Even More Merits

Though few know it, waiting to claim benefits can also be beneficial to married couples. Delay your benefit and you may help your spouse receive a higher survivor benefit should you pass away first. Furthermore, delaying claiming until age 70 can provide you and your family with extra income and larger Social Security benefits, ultimately setting the stage for comfortable years ahead. This decision should be made with the help of a professional that understands Social Security and that understands your specific financial situation.


Opinions expressed are not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Some investments mentioned may not be suitable for all investors. Past performance is not a guarantee of future results. Investing involves risk and investors may incur a profit or a loss.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

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