Upticks: Calculating the Age to Claim Social Security

By Luke Sullivan on May 1, 2025

When should you turn on Social Security? There may be more variables at play than you think. Jake and Cory discuss the complexities of Social Security, discussing strategies to help optimize your benefits and the impact of longevity, health, and working longer. Curious about how your financial plan and tax situation play into this decision? Tune in for insights to help you make more informed choices.

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Read an overview of the conversation below:

Calculating the Optimal Age to Claim Social Security

Determining the optimal age to claim Social Security involves considering various factors such as longevity, health history, marital status, and mathematical calculations. Longevity can significantly impact the total benefits received over a lifetime, while health history may influence the decision to claim earlier or later, depending on expected lifespan and medical expenses. Marital status also affects the strategy, as spousal benefits can provide additional income streams. Jake adds that while planning is inherently forward-looking, it involves dealing with many unknowns and uncertainties, making it important to approach the decision with a comprehensive understanding of one’s financial plan.

Eligibility and Benefit Calculation

To qualify for Social Security, one needs at least 40 quarters of historical earnings, equivalent to approximately 10 years of work. For those who have worked longer than 35 years, Social Security calculates benefits based on the highest 35 years of earnings. This method allows for individuals to receive benefits reflective of their peak earning years. Additionally, spouses who haven’t worked the required quarters may still be eligible for benefits based on their partner’s earnings. This provision acknowledges the contributions of homemakers and non-working spouses so they may receive support in retirement.

Strategies for Claiming Social Security

One strategy discussed is the idea of claiming Social Security early if one doesn’t need the benefits immediately. This approach can allow one’s nest egg to compound and grow by saving and investing the Social Security funds you don’t need to use right now. By turning on Social Security early, retirees can preserve their savings and potentially increase their overall investments. However, Jake challenges the notion that it could also make sense to wait until 70 to claim higher benefits, pointing out that individual circumstances and financial plans vary. For some, claiming earlier may provide necessary cash flow and reduce reliance on investment portfolios. The decision should be personalized, considering factors such as the current financial plan, expected longevity, and overall retirement goals.

The Role of Longevity, Health, and Working Longer

Individuals with a family history of long lifespans may benefit from delaying Social Security to increase their benefits, while those with health concerns might opt to claim earlier so they can receive benefits while they are still able to enjoy them. Additionally, working longer can significantly strengthen one’s financial plan and increase Social Security benefits. Extending working years can potentially provide financial advantages, including higher Social Security benefits and increased savings. For those concerned about Social Security, considering an extended career can be a viable option. Working longer not only can boost retirement savings but also allows individuals to delay claiming Social Security, resulting in higher monthly benefits.

Addressing Concerns About Social Security’s Future and Tax Planning

Despite concerns about Social Security’s long-term viability, Jake tells listeners that the program is unlikely to run out of money. Politicians will need to make difficult decisions to bolster the program’s sustainability, but the likelihood of Social Security disappearing is low. Not zero, just low. The program is funded by payroll taxes, and as long as people are working, Social Security can continue to provide benefits. However, there could be changes to the benefit structure to address funding issues in the future. Additionally, tax implications are an important consideration when deciding when to claim Social Security. Social Security benefits can affect taxable income, potentially leading to higher tax liabilities.

Jake and Cory stress that there is no one-size-fits-all answer to when to claim Social Security. The decision should be based on individual financial plans, tax considerations, and personal circumstances. They encourage listeners to seek professional guidance and make informed decisions to help optimize their retirement benefits.

Thank you for tuning in, we hope you have a great week!