What is the Ideal Age to Apply for Social Security?

My standard answer is you should wait until age 70, or at least as long as possible.  Social Security is an inflation-adjusted annuity that increases (in addition to inflation adjustments) every year you wait after age 62.  As a retirement planner, I advocate waiting to help my clients mitigate longevity risk (outliving your money) and the impact of inflation on your living expenses.

The Social Security Administration (SSA) will calculate your payment at your Full Retirement Age (FRA) based upon an adjusted average of your highest 35 years of earnings.  FRA has traditionally been age 65 but was indexed in the early 1980’s to recognize longer longevity and to help boost the system.   If you apply for SS before your FRA your payment will be discounted, but if you wait it will be increased each year.   In my case, since I was born in 1958, my FRA is age 66+ 8 months which is when I will receive 100% of payment.  On the other hand, if I apply at age 62 I will receive 72% the payment, and if wait until age 70 my payment will be 127% of my calculated benefit at my FRA.

There are a couple of additional considerations.  First, the survivor’s benefit of a married couple is based upon the higher of the two individual payments.  So, to maximize survivor benefit (which would keep my wife very happy) it is advantageous to delay the higher of two wage earns to age 70.   The second consideration is longevity.  The above advice is based on the belief you will lead a full life – the average longevity is into the mid-80’s.  If, however, you have health concerns or a family history that suggests impaired longevity, you may be better off applying for Social Security at the earliest date possible.

Helpful Links

FRA- Age and Percent Payout:     https://www.ssa.gov/oact/ProgData/ar_drc.html

SSA Benefit Calculators:  https://www.ssa.gov/planners/benefitcalculators.html