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Should I collect Social Security now ($2,621 per month) or later? I’m 62 and my wife is 60. I retired in 2015 and my wife will retire in February 2026. I’m collecting a pension of $5,125 per month. My wife earns $50,000 per year and will collect a $300 monthly pension when she retires in February 2026. She will also collect Social Security at 62 ($937 per month). We own our house, have $210,000 in IRAs, $250,000 in Roth, $45,000 in health savings accounts (HSAs) and no debt. Our annual expenses are $100,000. We have normal health issues like high cholesterol and high blood pressure but otherwise are in good health.
Congratulations on your early retirement, and to your wife on her upcoming retirement. You both have worked hard to put yourselves in a position to enjoy a lengthy post-career life—you’ve accumulated material savings, established a debt-free balance sheet and mapped out a target annual spending level. Fortunately, the work you’ve done so far should give you some flexibility as you approach the Social Security timing decision, which is one of the most common questions among retirees.
A financial advisor can help you decide when to claim Social Security and how to tackle other retirement planning decisions. Connect with an advisor today.
Let’s walk through a few scenarios in the context of your income sources, expenses and assets before evaluating the merits of each option, recognizing that many variations exist.
Option 1: Claim Social Security Now
If you were to start collecting Social Security now, your monthly benefit would be $2,621 or $31,452 per year. When combined with your $61,500 annual pension and your wife’s $50,000 salary, you would stand to earn $142,952 on an annualized basis until your wife retires in February 2026. This represents a surplus of about $43,000 over your $100,000 in annual expenses, meaning you wouldn’t need to tap into your investment accounts.
This picture changes materially when your wife retires next year, and total income is reduced by $50,000. However, with the addition of her $3,600 pension, you will still only be about $3,500 short of your $100,000 annual budget. If you have flexibility with some of your expenses, you may not need to dip into your retirement savings between the time she retires and begins collecting $11,244 annually in Social Security payments at age 62, especially if the gap between her retirement date and 62nd birthday is relatively short.
Once she begins collecting Social Security, you will again have an annual surplus of nearly $8,000. It’s a more narrow margin but collecting Security Security now could help to avoid tapping your retirement savings immediately.
(If you’re thinking about claiming Social Security at age 62, speak with a financial advisor about how it could impact your retirement income plan over the long haul.)
Option 2: Wait to Collect Social Security
Alternatively, you could delay Social Security until your full retirement age (FRA), which is 67. At this point, your estimated benefit would be about $3,745 per month or $44,940 per year. So in five years, your combined annual income would be about $121,000, including both Social Security benefits and both pensions. This approach yields a higher lifetime Social Security benefit and provides ample room above your annual expenses.
The obvious drawback is what to do in the interim until you reach your FRA. Your wife’s salary and your pension should cover you for the next eight months, you will have approximately four years in which your income remains below your anticipated expenses. Specifically, you’ll need to draw about $24,000 from your savings each year—or $96,000 cumulatively—assuming no flexibility in spending.
On the other hand, you could claim Social Security at age 65, when your estimated benefit would be around $3,370 per month or $40,440 per year. Adding this to your two pensions and your wife’s Social Security payments would give you nearly $117,000 in annual income. Again, a nice cushion relative to expenses.
In this scenario, you would still face two years of income shortfall, from the time your wife retires to the time you start collecting. This depends on your wife’s birthday and the exact timing of her Social Security benefits, but the shortfall could range from approximately $24,000 to about $35,000. You would need to draw from your investments during this time, but the benefit would come in the form of higher monthly Social Security payments over the long term.
(And if you need help estimating how long your retirement savings could last under different circumstances, connect with a financial advisor and talk it over.)
Making Your Decision
Deciding when to claim Social Security involves more than just picking an age. The timing can affect your monthly income, long-term financial stability, and how other retirement resources are used. Here are key considerations for claiming early vs. delaying.
Reasons to Claim Social Security Early
While waiting to collect Social Security leads to higher monthly payments, there are valid reasons to consider claiming now. It allows you to preserve your investment assets by reducing the need to take distributions from your IRAs. As a result, they can continue growing on a tax-deferred basis until absolutely needed to support larger expenses that arise in retirement.
Another reason to claim sooner rather than later is if you don’t expect to live into your 80s or 90s. If your family health history suggests a shorter life expectancy, claiming early could result in more total lifetime benefits, even though the monthly payment would be smaller than what you’d receive by waiting until FRA or a later date.
Some current and future retirees are concerned about policy changes. Some people prefer to “lock in” their benefits early in case future legislation reduces—or potentially eliminates—benefits. This is difficult to predict, however, so it shouldn’t necessarily drive a financial decision when other priorities should be considered first.
Reasons to Delay Social Security
Conversely, a logical reason to delay Social Security claims is if you expect to live a long life. The longer you live, the more advantageous the larger monthly claims become. Higher benefits in your later years can provide valuable peace of mind, especially since healthcare costs (and potential long-term care needs) typically increase with age. This can take pressure off your portfolio should meaningful healthcare expenses arise.
Delaying your claim also increases the survivor benefit your spouse may receive if you pass away first.
Lastly, waiting to claim can make sense if you have other income sources and assets to bridge the gap. With your pension and investments, you can afford to wait without making major sacrifices. (And if you need additional help with your decision, find a financial advisor who specializes in retirement planning.)
Additional Considerations
While it’s easy to look at Social Security as an isolated decision, and one based on simple calculations like the examples outlined here, I urge you to consider the timing question through the lens of your broader financial plan.
What are your goals for retirement and do they extend beyond simply covering expenses? Are there significant purchases you would like to make that your IRAs will need to support? How fixed is your annual budget otherwise? Do you have legacy planning objectives or charitable giving aspirations? Do you have long-term care insurance?
(A financial advisor can help you plan around major goals you hope to achieve in retirement, like buying a new home or transferring your wealth to loved ones.)
If you anticipate large purchases (a second home, for example), have no flexibility with annual spending, have legacy objective and do not have long-term care insurance, then preserving your retirement savings becomes a bigger priority.
Conversely, if you have no significant expenses on the horizon, no long-term legacy or gifting goals, sufficient long-term care coverage in place, expect to live several decades in retirement and can tighten your belt for a few years, then your capacity to delay Social Security payments increases.
In either case, it could be helpful to evaluate potential interim withdrawals in relation to the asset allocation across your IRAs, since your expected portfolio returns could help replenish any withdrawals you make in the meantime.
Bottom Line
Ultimately, the decision about when to claim Social Security should reflect your personal goals and be consistent with your broader financial plan. While this might seem like an isolated financial decision, more variables come into play than just your income, expenses, assets and liabilities. You’re in the fortunate position of having many options—and with some thoughtful planning, you can make the most of it.
Retirement Planning Tips
- Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Starting at age 73—or 75 for those born in 1960 or later—you’re obligated to begin taking required minimum distributions (RMDs) from most retirement accounts. If you don’t plan for these withdrawals in advance, you could face higher taxable income down the road. Strategically drawing down funds before reaching RMD age may help manage your tax liability more effectively.
Jeremy Suschak, CFP®, is a SmartAsset financial planning columnist who answers reader questions on personal finance topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.
Jeremy is a financial advisor and head of business development at DBR & Co. He has been compensated for this article. Additional resources from the author can be found at dbroot.com.
Please note that Jeremy is not a participant in SmartAdvisor AMP, is not an employee of SmartAsset and he has been compensated for this article.
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