When Should You Receive Social Security Benefits?

by Miranda Marquit

One of the best ways to ensure that you have a good safety net during retirement is to maximize when you take Social Security benefits. The decision about when to take Social Security benefits depends on your financial situation, though. How much money you receive is based on how long you have been working (and paying into the system), as well as when you decide to start taking benefits.

The longer you work, and the longer you wait to begin taking benefits, the higher your monthly payments will be. However, if you have lost your job, and can’t find a new one, Social Security benefits might be necessary to help keep you afloat.

When are You Eligible for Social Security Benefits?

When should you take Social Security Benefits?First of all, you need to figure out when you are eligible for Social Security benefits. If you are disabled in some way, you can begin receiving Social Security benefits no matter your age. However, you will have to prove your disability. Your benefits will be considered disability benefits until you reach your full retirement age. At that point, your disability benefits are converted to retirement benefits.

If you aren’t disabled, the earliest age you can begin receiving Social Security benefits is age 62. However, it’s important that you understand that you won’t qualify for “full” benefits. If you start taking benefits before you reach what is considered the “full” retirement age, you end up with reduced benefits. Your full retirement age depends on when you were born. The Social Security Administration (SSA) offers a web site that can point you to your full retirement age. For people born after 1960, though, the retirement age is currently 67. You can find more information about how your benefits are reduced by consulting the benefits chart provided by the SSA.

You can also improve your monthly Social Security benefit by waiting longer to take your Social Security benefits. If you wait until you are beyond your full retirement age, you will receive an additional 8% for each year until you are 70. There is a double advantage to waiting as well, since if you keep working you can pay more into the system and increase your benefit that way. The higher your monthly benefit, the less you have to rely on your own next egg to cover your expenses.

Can You Take Social Security Benefits While Working?

It is possible to start receiving Social Security benefits while you are working. However, you might be subject to a cap. As you reach a certain amount of benefits while you have a job, you have to give back half of every dollar you receive in benefits — and this rule applies even after full retirement age. It is rarely worth it to start taking your Social Security benefits while you are working. However, if you have had your hours cut to part-time, and you are at least 62, you might need some benefits to help you through the wage reduction.

Also, remember that you can start taking money penalty-free from your tax-advantaged retirement account at age 59 1/2. That means that you might be able to supplement with those benefits until you reach full retirement age. Before you make a decision about drawing your Social Security benefits, consider your financial situation, and your cash flow. Only take Social Security benefits before your full retirement age if you have to.

Photo credit: DonkeyHotey

Published or updated February 13, 2012.
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{ 3 comments… read them below or add one }

1 Connie

Quoting from your article I beg to differ with the information you provided – “As you reach a certain amount of benefits while you have a job, you have to give back half of every dollar you receive in benefits — AND THIS RULE APPLIES EVEN AFTER FULL RETIRMENT AGE.”

I beg to differ with this. beginning the month you attain your full retirement age you are no longer subject to the “give back” one dollar for every two you earn rule.


2 Ritch

Connie is right; the information in your article is incorrect as it relates to working and receiving SSB’s. Once an individual reaches their Full Retirement Age, the limitation on “Earned Income” goes away.


3 Miranda

Thank you for pointing this out. You are correct. I should have read closer. I saw that there is a giveback during the year of retirement age (but it’s $1 for every $3 earned above the limit during the year reached for retirement age). Thanks for bringing this to my attention and prompting me to look closer at the situation. I should have read closer before completing the post.


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