When to Start Taking Social Security Benefits

Social Security can be an important component of your retirement income. But at what age should you start collecting payments? There is no one “right” answer, because everyone’s situation is different, but one thing is certain: Timing is everything.

You can begin accepting Social Security benefits as early as 62, but your monthly checks will be 25 to 30 percent smaller than if you wait until your “full retirement age,” which is 66 to 67. And once you reach your full retirement age, your monthly payments will increase 8 percent each year until they “max out” when you turn 70.

In deciding when to take Social Security, you will need to consider a variety of factors, including your life expectancy and your other sources of revenue, such as income from employment and withdrawals from your IRA, 401(k) or other retirement accounts. But if you are married, you and your spouse can also evaluate various timing-related strategies to maximize your payments. Here are two techniques to consider:

File and suspend— The higher-earning spouse can file for and then suspend their benefits once they reach full retirement age. Once the lower-earning spouse has also reached full retirement age, they can claim a spousal benefit, typically 50 percent of the higher-earning spouse’s benefit.

While receiving these spousal benefits, you and your spouse would then let your own benefits continue to grow at the 8 percent rate mentioned above. You can then each decide when to claim your own increased benefits anytime up until age 70, which would provide the highest amount possible.

File restricted—If the lower wage earner wants to retire, they could begin collecting their own reduced benefit as early as age 62. The higher wage earner then waits until their full retirement age and files a restricted application for a spousal benefit, rather than their own.

While receiving these spousal benefits—about 50 percent of their spouse’s full retirement age benefit—they can let their own benefit increase at the 8 percent annual rate until they reach 70. At this age, benefits will top out, and they would switch from collecting a spousal benefit to collecting their own.

It is important to make an informed decision regarding how much income you may forfeit over your lifetime(s) based on when you claim benefits and the strategies you employ. For help determining which strategy best fits your retirement income plan, contact your RBC Wealth Management financial advisor or use the advisor locator tool to find an advisor near you.

Important disclosure information about Royal Bank of Canada (RBC) and RBC Capital Markets, LLC