62, 70 or Somewhere In Between? Identifying the Optimal Age for Drawing Social Security

Should You Delay Social Security Benefits?

Social Security benefits become accessible at age 62, but full retirement benefits will only be available once an individual reaches their full retirement age, determined by their birth date.1 Any benefits received before reaching your full retirement age are reduced by ~6.5% per year when drawn early.

This percentage reduction is permanent, meaning if you were to access benefits at 62, the percentage taken off of Social Security would remain, even after reaching full retirement age.2 If you were to wait longer than the full retirement age to access Social Security benefits, you would receive an 8% increase in benefit amount per year of delay, up to a maximum age of 70.2

Social Security and Taxes

Typically, between 50% and 85% of Social Security benefits are taxed. This happens based upon your filing status and total sources of income. If the total of half your Social Security benefits plus any additional income is greater than the IRS’s designated number below, 85% of your benefit is taxable.

The current base amounts are:3 

  • Single or Head of Household: $25,000
  • Married Filing Jointly: $32,000

It’s important to note that for couples filing jointly, all taxable income earned by both spouses must be counted - even if one spouse does not yet receive Social Security benefits.

Consider Longevity

Receiving your Social Security benefits early may be beneficial for those with health conditions or a lower life expectancy. This option provides retirees with a steady source of income earlier, which could also benefit those who are no longer working and lack other income sources in retirement.

Alternatively, if you or your spouse have a family history of longevity and face few health problems, you may find it beneficial to hold off on collecting Social Security benefits until full retirement age. The breakeven age for drawing as late as possible is generally in your mid-80s, but can vary based upon several factors.

Investment Opportunities

The benefits of waiting are clear. But for some, withdrawing Social Security benefits early could bring a greater advantage. Investing Social Security funds has the potential to bring a greater return, as long as the benefits of the investment outweigh the loss from accessing Social Security early.

If this is something you are considering, you’ll want to work with your financial planner or investment advisor first to determine if this option is right for you.

Working and Social Security Benefits

You can continue to work past your full retirement age. In fact, working longer can actually increase the total amount you receive in Social Security benefits.2 Remember to consider tax implications with this route, as a greater income may alter or have a negative impact on certain tax strategies.

If you collect Social Security benefits before full retirement age, earning additional income over a threshold will reduce your Social Security benefit. For 2022, for every dollar you earn over ~$19k, you can lose 50% of your early Social Security benefit. That’s a big reason to consider waiting! The reduced amount is added back into your benefits once you reach full retirement age.4

Considering the factors above, deciding when to receive Social Security benefits will depend on your personal financial circumstances.

To receive a customized Social Security strategy, schedule a meeting with one of our financial advisors to examine your options and identify the best course of action.




This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.