The best time to claim Social Security benefits

When it comes to social security, taking benefits at age 62 could mean a permanent cut of up to 30% in your monthly check. But for many Americans, getting that money sooner, well, they say it's worth it. For more, we're bringing in Yahoo Finance's Kerry Hannan. Kerry,

you have heard from more than a thousand readers on this. What did they say? Did they take the benefits earlier or did they find it more beneficial to wait?

Yeah, Brooke, this is a huge hot button issue. I'm telling you, people just go crazy when you bring up uh when they should take social security. This is a very personal decision. But the fact is more than a quarter of Americans take social security, their social security benefit starting at age 62, which is the earliest you can take it. Um, and they do this, the ones that wrote into us who I've talked to said, we're doing this because I want the money right now. I paid into the system, I want to enjoy it. I don't know how long I'm going to live. or if I don't need the money to live on, um I want to invest it. So uh it becomes this real really um difficult sort of uh fiery subject for folks. And and the point is if you a lot of people need the money to live on right now, or they have health issues and they they very well might not have longevity. But if you can wait at least to your full retirement age, which if you were born in 1960 or later is 67, um you'll you know, you'll get an extra 30% bump over if you started at 62. If you can wait till age 70 from your full retirement age, each year until age 70, you get an extra 8% bump up. So that's an earned credit that you get moving forward. It stops at age 70. But it really is is an issue that people uh wrestle with and and uh again, as I can tell by all the readers that commented on my column about you're leaving money on the table if you take it at 62. They said, nah-uh, I want it right now.

So many people talking about this, but also there it seems like it's a really deeply personal issue like you mentioned, of course, so many things to consider. So if you're married perhaps, what should you consider around that?

Yeah, Brooke, that is a very big issue and many and financial advisors will tell you that this is something to you have to be strategic and intentional about it. If you're married and particularly if there's one spouse that is the primary bread winner or if there's a big age gap between uh the individual with the higher income, um and and the second partner is is quite a bit younger or even a few years younger. Um, it it is truly a benefit to your to your spouse if the higher earner can wait till age 70 and and play it out to get that highest possible bang for the social security benefit because if they die before the the younger spouse or the uh spouse with the lower earnings, that spouse will get the higher social security benefit over their own. They would get the the one from the individual that waited to 70. So say that person, you know, one spouse waits till 70, the other one might decide to take it at their full retirement age. But it is a strategic thing to think about. You want to and even many readers wrote into to Yahoo Finance saying that I decided to delay till 70 so that my spouse will have a bigger check moving forward after I'm gone.

Wow, lots to consider there, lots of important decisions. I mean, at the same time, people do enjoy working and and some of them say, hey, they're not sure if they want to take this on at age 62. But what happens if you are willing to start at 62 and you do still want to work? What should you think about then?

Yeah, Brooke, here's the thing. This is becoming increasingly common. Uh there's sort of this slow fade to retirement. So even if someone says, hey, you know, I'm going to start my social security benefit at 62. There's a lot of folks who are continuing to earn income after that age. And Social security says, uh-uh. We've got a we've got to uh we have another sort of formula to consider. If you started your social security checks at 62 and you continue to work, um they have set and they just set the new limit for 2027 when they announced the cost of living adjustment last year, the Social Security administration. I mean last week they announced the new one for 2027. For this, if you earn over $24,480 a year for 2027, you can earn up to that amount and that's fine. If you earn more than that amount, they will withhold a portion of your social security benefit. So until you reach your full retirement age. So that's between 62 and let's say 67. And then after 67, your full retirement age, they don't do, you get your full check, there's no problem there. But they will withhold it between those years up until your full retirement age. You don't lose the money. They will you will get it all back, but you're not going to get it in a lump sum when you reach your full retirement age. You they'll they'll um sort of parse it out uh over an increased amount, an increased allocation in your checks moving forward.