When Should You Claim Social Security Benefits: 8 Critical Things You Need to Know

When Should You Claim Social Security Benefits?

You might think you know when is the best time for you to claim your Social Security benefits. Maybe you’ve heard that waiting until 70 maximizes your benefits, or that claiming early at 62 is best because “who knows what will happen to Social Security?”

The truth is more complicated. As Forbes Magazine reports, Americans leave about $10 billion in Social Security benefits unclaimed every year because they don’t understand all their options.

Why One-Size-Fits-All Advice Doesn’t Work

There are 2,728 rules in the Social Security handbook, plus hundreds of thousands of rules about those rules. With this complexity, following generic advice could cost you dearly.

Your Social Security decision isn’t just about getting the biggest check. It’s about making the right choice for your unique situation.

Let’s explore the 8 critical factors you need to consider when you decide :

1. Understanding Your True Benefit Value

If you’ve earned an average income throughout your career, your lifetime Social Security benefits could add up to three-quarters of a million dollars. For married couples, that number could approach $1.5 million in total benefits.

These aren’t small numbers. This is your money – you’ve contributed up to 12.4% of every paycheck since your first job.

The size of your monthly check is just one piece of the puzzle. You need to consider how this money fits into your overall retirement picture.

2. The Tax Impact of Your Decision

Here’s something that surprises most people: up to 85% of your Social Security benefits could be taxable. This tax trap was set in 1983 and made worse in 1993.

If you’re married and your combined income exceeds $44,000 (or singles over $34,000), you’ll trigger what experts call the “tax torpedo.” Your Social Security benefits become taxable income.

Consider this real example from our files: A couple had saved $660,853 in their 401(k). When we analyzed their situation, they discovered they would pay $941,334 in taxes over their retirement if they didn’t plan properly. With the right strategy, they reduced their tax burden to $218,081 – saving over $723,253!

3. The Work and Benefits Balance

If you claim before full retirement age and continue working, you need to understand the earnings test. In 2018, if you earned more than $17,040, Social Security would take away $1 in benefits for every $2 above that threshold.

This doesn’t mean you shouldn’t claim early – it means you need to understand how working affects your benefits.

4. The Spousal Benefits Factor

Even if your spouse never worked outside the home, they could be eligible for up to 50% of your benefit amount. Here’s a real example: A husband qualifying for $2,500 monthly means his wife could receive $1,250 in spousal benefits, even if she never paid into Social Security.

Many people leave this money on the table because they don’t understand their options.

5. The Divorce Factor

If you were married for at least 10 years and haven’t remarried before age 60, you could claim benefits on your ex-spouse’s record. This could mean thousands of extra dollars annually.

We recently helped a client receive a spousal benefit of $955 from her ex-spouse’s record while letting her own benefit grow to $2,200 by age 70. That’s smart planning, not just maximizing.

6. The Healthcare Cost Factor

Your Social Security decision affects your Medicare premiums. Claim at the wrong time, and you could see your Medicare costs double.

This is one of those hidden factors that most people don’t consider when making their Social Security decision.

7. The Life Expectancy Factor

While waiting until 70 gives you the biggest check, it’s not always the right decision. If you wait until 70 and pass away at 66, your family gets nothing. You’ve left tens of thousands of dollars on the table.

Your health, family history, and retirement goals need to be part of this decision.

8. The Advisor Factor

Don’t rely on the Social Security Administration for advice. While they’re dedicated public servants, Social Security Administration employees are legally forbidden from giving personalized advice about maximizing your benefits.

A recent Inspector General report found that 9,224 widow and widower beneficiaries were underpaid by approximately $131.8 million because they didn’t receive proper guidance.

Making the Right Decision for Your Social Security Benefits

Consider this real case study: A couple planned to claim at 62, which would have given them $2,836 per month combined. After analyzing their full situation – taxes, other income, health, and goals – they learned a different strategy would increase their monthly benefit by $1,995. That’s an extra $23,940 per year!

But remember – what worked for them might not work for you.

Getting Professional Help

You need customized analysis and advice that considers:

• Your tax situation
• Your other retirement income
• Your health and family history
• Your spouse’s benefits
• Your Medicare premiums
• Your retirement goals

At B.O.S.S. Retirement Solutions, we offer a free, customized 5-point Social Security analysis. Some firms charge hundreds of dollars for this type of analysis, but we won’t charge you a dime.

Our analysis helps you understand:

• The best timing for your unique situation
• How to minimize or eliminate benefit taxes
• Ways to optimize spousal benefits
• How to avoid increased Medicare premiums
• Whether you qualify for additional benefits

If you’ve saved at least $200,000 for retirement, call 800.637.1031 to schedule your free analysis.

Remember, there’s no single “right” age to claim Social Security. There’s only the right decision for you and your family based on your complete financial picture.

Don’t leave your Social Security decision to chance. Get the personalized guidance you need to make the right choice for your situation.