Commentary · Commentary
The Decision Most People Get Wrong Without Realizing It: When to Claim Social Security
Written by the William Allan team · Reviewed by Jason Crawshaw, CPA ·
Ask most people when they plan to claim Social Security and you get a shrug and a number. Sixty-two, usually, because that is when you can. Or whenever they retire, because the two feel like the same event.
They are not the same event, and the gap between them is one of the larger financial decisions a household makes. It is also close to irreversible. Why the timing matters more than people expect Social Security is not a fixed benefit that sits there waiting for you. The monthly amount you receive depends heavily on when you start taking it. Claiming before your full retirement age can permanently reduce the monthly benefit. Delaying past full retirement age increases it, up to age 70, after which there is no further benefit to waiting.
The specific figures depend on your birth year and on current rules, which is why ssa.gov is the right place to see your own numbers rather than a rule of thumb from a friend.
The permanence is what makes this different from most financial decisions. A portfolio can be adjusted. An asset allocation can be revisited. A claiming decision, once the checks start and the limited withdrawal window closes, is largely the decision you live with for the rest of your life. It is not just your decision For married couples, the claiming decision is really two decisions that interact, and the survivor benefit is the piece most people overlook.
When one spouse dies, the surviving spouse generally keeps the larger of the two benefits, not both. That means the higher earner's claiming decision is not only about their own retirement. It effectively sets the floor for whichever spouse lives longer, potentially for decades.
A couple can look at each benefit in isolation and make two individually reasonable choices that combine into a poor one. This is a coordination problem, not a math problem. Where the portfolio comes in Here is the part that connects to the rest of your plan.
Delaying Social Security means you need income from somewhere else in the meantime. For most households, that somewhere else is the portfolio. So the claiming decision is not just a Social Security question. It is a question about how much you draw from your investments in the early years of retirement, and from which accounts.
That is a planning conversation, not a form you fill out at the Social Security office. It involves your withdrawal strategy, your tax picture across the coming decade, your health and longevity expectations, and whether you are still earning income. The other tax layer people miss A portion of Social Security benefits can be taxable depending on your total income, and other retirement income can push more of it into taxable territory. Separately, Medicare premiums include an income-related surcharge that, under current rules, is generally based on your income from two years prior.
The practical effect is that a large withdrawal or a Roth conversion in one year can quietly raise your Medicare premiums two years later. Few people connect those two events, because they happen so far apart.
None of this means you should avoid those moves. It means they are worth planning rather than stumbling into. The bottom line Most people spend years thinking about how to build the portfolio and about ten minutes thinking about when to turn on Social Security. The second decision is permanent, interacts with taxes and Medicare, and for couples sets the survivor's income for life.
If retirement is in view and you have not looked at claiming as part of a broader withdrawal and tax strategy, that is a conversation worth having before you file, not after.
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Informational purposes only. Not investment, tax, or legal advice. Social Security and Medicare rules, benefit calculations, and tax treatment depend on individual circumstances and current law, which is subject to change. Confirm your own benefit figures at ssa.gov and consult a qualified tax professional regarding your specific situation. William Allan is an investment adviser registered with the SEC; registration does not imply any specific level of skill or training.