Social Security Strategies

Social Security Strategies

May 25, 2023

Deciding when to take your Social Security retirement benefits1 is an important decision and a frequent topic of conversation when meeting with our clients. We generally recommend waiting until age 70. However, there are certain instances where taking it earlier may make sense. How do you know what is appropriate for you? For starters, always ask us! ALWAYS!

For individuals born before 1960, the full retirement age (FRA) is between 66 and 67. For those born after 1960, the full retirement age is 67. You can see your projected benefit, as well as get useful information, by visiting and signing up to view your personal account. For every year you wait past your full retirement age, you will receive an annual increase of 8% (0.666% per month) until age 70. While you can file for benefits as early as age 62, this is only advisable in rare circumstances. For this article, we will focus on benefits at full retirement age and beyond.

One strategy that may make sense for a couple involves the lower earning spouse filing for benefits at full retirement age (or at some point before age 70). In this scenario the higher earning spouse will wait until age 70 to file but will be able to start receiving spousal benefits. This strategy allows the couple to have some income from Social Security while still allowing the higher earner's benefits to grow.

Another strategy that is ill advised involves taking Social Security before age 70 and investing the increased cash flow. We hear this argument from time to time. If you believe you can achieve a higher return by investing the money, you might consider taking the benefits early. However, this comes with significant risk as well as potential hidden pitfalls like taxes. Investing does not guarantee returns while Social Security, on the other hand, provides a guaranteed monthly benefit for life, and the increase in benefits from delaying is also guaranteed. The bigger risk to this strategy is the execution risk! Planning to do something versus actually implementing a strategic plan can produce very different and potentially adverse financial outcomes.

One of the best ways to think about the timing of your benefits comes down to what’s known as the “break-even age”. The break-even age for Social Security refers to the age at which the total accumulated benefits received from delaying the start of Social Security equal the total accumulated benefits received from starting benefits early. In other words, it's the age at which the total lifetime benefits are roughly the same, regardless of whether you start receiving benefits early or delay them.

The break-even age varies depending on several factors, including your actual benefit amount, the age at which you start receiving benefits, and your life expectancy. It's important to note that the break-even age is an estimate, not a guarantee.

As a general guideline, the break-even age for delaying Social Security benefits is typically in your early 80s. If you live beyond your break-even age, you will receive higher total lifetime benefits by delaying the start of Social Security. However, if you pass away before your break-even age, starting benefits earlier would have provided a greater total benefit.

An example might be helpful. If your benefit at age 67 (FRA) is $3,000 per month or $36,000 per year, your benefit at age 70 would be $3,720 per month or $44,640 per year. Just before age 83, both scenarios would have paid out $576,000. For every day you live past your 83rd birthday, you are better off by waiting until age 70 to start receiving benefits.

In conjunction with your break-even age, your personal situation is also an important factor in the final decision. If you are in poor health or require immediate income, filing for benefits before age 70 might make sense. Again, before any decision is made it is imperative you consult with your advisor.

Here are two of the biggest reasons to consider delaying your Social Security benefits. You must consider taxes and other unintended consequences.

  • Potential higher income taxes: If your provisional income2 is more than $34,000 ($44,000 for joint filers), then up to 85% of your benefits are taxable. Do you have other sources of income and cash flow that are more efficient from a tax perspective?

  • Impact on Medicare costs: The standard Medicare Part B premium is generally deducted from your Social Security benefits. The amount of the premium can change each year and is typically based on your income. If your income exceeds a certain threshold3, you may have to pay a higher Part B premium, known as the IRMAA (Income-related monthly adjustment amount). The IRMAA is determined by your modified adjusted gross income (MAGI) from two years prior. Similarly, your income level can also affect your Medicare Part D prescription drug plan premium. It is important to note that if your income has significantly changed since then, you can contact the Social Security Administration to request a re-evaluation of your IRMAA.

If you have already filed for Social Security benefits and feel you have made a mistake, there may still be options available to you. You have the right to withdraw your Social Security retirement application for up to 12 months after you first became entitled to retirement benefits. This is a once-in-a-lifetime opportunity. If you choose to withdraw your application, you must repay all the benefits you and your family members received based on your retirement application.

You may also suspend your benefits once full retirement age is reached. Benefits can be delayed up until age 70 and you may be eligible for delayed retirement credits (DRCs)4.

When to file for Social Security benefits is a major decision and can have lifetime ramifications for you and your family. Laws that affect taxes, benefits, age limits, and myriad other factors are subject to frequent change5. Enlisting the help of your advisory team is crucial before making any final decisions.


1This article will discuss Social Security benefits as they pertain to retirement benefits and timing. It is important to note there are also benefits with regards to disability, divorce and survivorship that are beyond the scope of this piece.

2Your adjusted gross income plus half your Social Security benefits, plus any tax-exempt income you received over the course of the tax year.

3IRMAA for Medicare Part B&D starts to increase when income (MFJ) exceeds $194,000 in 2023.

4The suspension must be requested, and it doesn't happen automatically. For each month your benefits are suspended, you may earn delayed retirement credits, which could increase your benefits when you choose to resume them. If you suspend your retirement benefits, any benefits you receive on someone else’s record may also be suspended. Your benefit may be suspended if you are receiving benefits on another person's record. If you have Medicare and you suspend your benefits, you'll need to arrange payment for your Medicare Part B premiums if they were previously deducted from your Social Security benefits. Individuals can request the reinstatement of your benefits at any time, but they will automatically be reinstated once you reach age 70.