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Financial Planning

Helping Clients Decide When to Claim Social Security

Katrin Olson

Why It Matters:

  • The timing for choosing when to claim Social Security could be the biggest financial decision your clients make in retirement.

  • Helping your clients understand the implications to claiming Social Security at different ages is paramount to helping them make the best decision. 
  • To accommodate longer lifespans, it may help clients to take the long view by delaying claiming Social Security until age 70.

One of the biggest decisions you can help your clients make as they prepare for their financial future in retirement is when to claim Social Security benefits. Americans, according to the Social Security Administration, get 33% of their annual income from Social Security.1 Given the significant role that income plays in a retiree’s overall economic stability, walking your clients through their options will help ensure they make informed decisions about the best time for them to claim.

How are Social Security benefits determined?

  • Eligibility: Eligibility typically requires 10 years in the workforce. Be aware that time spent in the workforce only determines eligibility, not the amount of your client’s monthly benefit.
  • Full Retirement Age (FRA): This is the age when a worker is eligible for full, unreduced retirement benefits. Their FRA is either 66 or 67, depending on their date of birth.
  • Primary Insurance Amount (PIA): The PIA is the Social Security Administration’s calculation of a worker’s benefits, based on the income they made during their 35 highest-earning years of work. It determines the amount of monthly income it would provide if they begin collecting benefits at FRA.2

An important tool to help clients track their estimated Social Security benefits

As of January 2020, the average Social Security benefit was $1,503 per month.3 However the best estimate of what someone’s likely monthly income will be can be found by checking their annual statement and setting up any Social Security account. If they haven’t already done so, your client can set up an account by visiting ssa.gov/myaccount. The Social Security Administration also mails these statements annually to Americans 60 and up who aren’t receiving benefits and don’t have an online account.4

The annual statement gives a record of a worker’s earnings and will tell them their exact Social Security retirement age. Also, if they have worked long enough to qualify to receive benefits, which again is 10 years, then it provides estimated benefits at FRA. It’s this information that will help you and your client put together a thoughtful strategy around financial retirement planning.

The big question is: when should they claim Social Security?

In many respects, it’s never been more accessible — a claimant can have their monthly check directly deposited into their bank account, or get a debit card to withdraw right from their Social Security account.5 But before these conveniences can be enjoyed, your client must first decide when to claim.

There are three main options of when to claim:

  • Early Retirement Age: 62 – Filing for Social Security early allows access to monthly income earlier, but it means lower monthly payments for the rest of the retiree’s life. These early filing reductions could cut benefits by as much as 30%.
  • Filing at FRA: 66 for most people – At this age, workers are eligible for 100 percent of their benefits.
  • Delayed Retirement Age: 70 – The last option will provide the highest benefit possible. For every year after FRA a worker waits to receive benefits, the benefit amount will increase by 8% up to age 70. It’s worth noting that there is no incentive to delay claiming after age 70.6

Scenarios around claiming benefits — how claims at different ages translate into dollars

Say a worker turns 62 in 2020 and will reach full retirement age at 66 years and eight months, with earnings that make them eligible at that point for a monthly benefit of $1,000. Opting to receive benefits at age 62 will reduce their monthly benefit by 28.4% to $716 to account for the longer time they could receive benefits, according to the Social Security Administration.7

If they instead choose to wait to get their benefits at age 70, the monthly benefit increases to $1,266. The larger amount is due to the delayed retirement credits earned for the decision to postpone receiving benefits past full retirement age. In this example, the benefit they would get at age 70 is about 76% more than the benefit they would receive each month if benefits started at age 62, or a difference of $550 each month.7

Keep in mind, the amount a worker receives when they claim Social Security will likely be the amount they get for the rest of their life with the only increase coming in the form of Cost of Living Adjustments, or COLAs. The latest was 1.6% that took effect in December 2019.8

Take the long view as many of us will live into our 80s, 90s, and beyond

Today, a 65-year-old can expect to live another 19 to 21.5 years, on average, according to the Social Security Administration. What's more, the government agency says a third of 65-year-olds will hit age 90, and 1 in 7 will live beyond age 95.9

Odds are, many of us will find ourselves living into our 90s. When you consider the increasing costs of healthcare, taking the long view by maximizing Social Security makes good sense.

Evaluating individual circumstances to create the best retirement plan for your client

With no one-size-fits-all retirement plan to follow, your client will need to consider not only monthly income, but also their retirement years as a whole. Factors that influence this decision include:

  • Marital status: What is the best approach for couples to get the most out of their claims?
  • Health: How is their personal health? Does longevity run in their family?
  • Lifestyle: How do they envision spending their time in retirement?
  • Housing: Do they want to stay in their home? Downsize?
  • What other sources of income do they have: 401(K), pension, savings, etc.?

Remember, there’s no perfect retirement strategy. The important thing to do is to make sure you and your client have all financial information at the ready to build a financial future for your client that’s designed to last.

Things to Consider:

  • How to help your clients decide on when to claim Social Security
  • Longer lifespans mean when to claim Social Security is crucial 
  • When to claim Social Security is the cornerstone to retirement planning

1 “Fact Sheet,” Social Security Administration, 2020

2 “Retirement Benefits,” Social Security Administration, 2020

3 "How Much You Will Get From Social Security," U.S. News, January 2020

4 “Frequently Asked Questions,” Social Security Administration, 2020

5 “Social Security Direct Deposit,” Social Security Administration, 2020

6 “Early or Late Retirement?” Social Security Administration, 2020

7 “When to Start Receiving Retirement Benefits,” Social Security Administration, 2020

8 “Cost-of-Living Adjustment Information for 2020,” Social Security Administration, 2020

9 “How Living Longer Will Impact Your Retirement,” U.S. NEWS , April 2020


Neither Transamerica nor its agents or representatives may provide tax or legal advice.  Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal professionals regarding their particular situation and the concepts presented herein.

Transamerica Resources, Inc. is an Aegon company and is affiliated with various companies which include, but are not limited to, insurance companies and broker-dealers. Transamerica Resources, Inc. does not offer insurance products or securities. The information provided is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical or financial advice or guidance. Please consult your personal independent professionals for answers to your specific questions.


Financial Planning
Social Security