For many individuals nearing retirement, deciding when to begin Social Security benefits is one of the most important financial decisions they will make. While some retirees choose to claim benefits as soon as they are eligible, others delay benefits to increase their monthly income later in retirement.

Social Security Full Retirement Age (FRA)

Social Security full retirement age (FRA) is the age at which an individual receives the full benefit based on his or her highest 35 years of earnings history. It also represents the point at which benefits are not reduced. FRA depends on the year of birth, between 66 and 67 for those born from 1954-1959, and age 67 for those born in 1960 or later.

When can you start taking Social Security?

The earliest age you can begin receiving Social Security retirement benefits is 62. However, claiming early results in a permanent reduction in your monthly benefit. Monthly benefits are reduced by 5/9 of 1% for each month you claim before FRA, up to a maximum of 36 months. If taken earlier than 36 months before FRA, the benefits are reduced even further by 5/12 of 1%. The following table shows how greatly the retirement benefits are affected depending on how early someone claims benefits:

As you can see, someone who claims benefits at age 62 takes a 30% permanent cut to his or her lifetime benefit. More importantly, if the higher benefit spouse takes his or her Social Security benefit before full retirement age, that permanently reduces the maximum spousal benefit for the couple’s lifetime. 

Taxation of Social Security Benefits

Another consideration (with respect to the decision on when to claim benefits) is the taxation of Social Security. Depending on your total income, a portion of your Social Security benefits may be subject to federal income tax. For married couples filing jointly, taxation is based on a calculation called provisional income, which uses a combined income calculation from the following sources:

• Half of your Social Security benefits
• Wages
• Interest and dividends
• Retirement account distributions
• Other taxable income

For 2026, the general thresholds are:

• $32,000 – $44,000 of combined income: Up to 50% of benefits may be taxable
• Over $44,000: Up to 85% of benefits may be taxable

The good news for retirees is that the overwhelming majority of states (42) no longer tax Social Security at the state level. Proper planning can help manage how Social Security benefits interact with other retirement income. Depending on your overall finances and income sources, there may be opportunities to keep total income lower so that less than 85% of your Social Security benefits are taxable at the federal level. 

Implications of Working While Receiving Benefits

Starting benefits at age 62 means you will receive smaller monthly payments for life. Interestingly enough, retirees are getting more informed on this decision. The percentage of people claiming Social Security benefits at age 62 has decreased in recent years. As of 2023, about 23% of individuals claim benefits at age 62 (according to Bankrate). Despite ongoing media attention about the Social Security trust fund potentially being depleted in the next 6 to 7 years, many people are choosing to wait longer before claiming benefits.

One reason for this trend is that people are working longer, often because they are not fully financially prepared for retirement. In addition, Social Security applies an earnings test to individuals who claim benefits before reaching full retirement age.

For 2026, the earnings limit is $23,400. Benefits are temporarily reduced by $1 for every $2 earned over that amount. This rule applies only to earned income, not passive income such as rental income, pensions, or investment income. Because the earnings limit is relatively low, it discourages many individuals from claiming benefits before reaching FRA or retiring.

Once full retirement age is reached, the earnings limit no longer applies, and benefits are not reduced based on income.

When might it make sense to claim benefits early?

Claiming early while working can be a huge mistake because not only are benefits permanently reduced, but the benefits are garnished until they are recalculated at FRA. There are certain instances in which claiming early, even as early as age 62, may make sense:

• Individuals who need income to cover living expenses
• Individuals who have retired early and do not have other income sources
• Those with health concerns or shorter life expectancy
• A much younger spouse (7+ years younger) who has a lower retirement benefit and would lose their own benefit once the older spouse passes

However, starting benefits early can reduce long-term retirement income, particularly for individuals who live into their 80s or beyond. The breakeven age for claiming benefits at age 62 versus age 67 typically falls in the upper 70s to early 80s, depending on the benefit amounts and the ages of both spouses.

One common claiming mistake occurs when a terminally ill or unhealthy spouse with the higher benefit elects to claim early while the healthier spouse delays. In many cases, it makes more sense for the healthier spouse to begin claiming their lower benefit while allowing the higher-earning spouse’s benefit to continue accruing until full retirement age, age 70, or their passing.

Delaying Benefits

If you delay claiming Social Security past your full retirement age, your monthly benefit increases until age 70. Delayed retirement credits add 8% per year (or 2/3 of 1% per month) to your benefit. This means:

• Waiting from 67 to 70 can increase your benefit by 24%
• A larger benefit can also increase survivor benefits for a spouse

Delaying benefits may be beneficial if:

• Individuals or households have other sources of retirement income
• Individuals have good family longevity and expect to live longer than average
• Individuals are in good health
• Households aim to keep post-retirement income lower in early years to maximize lower ordinary income brackets with things like Roth IRA conversions or generating capital gains at 0% Federal tax rate
• Individuals aim to maximize survivor benefits for their spouse.

Example: How Claiming Age Impacts Total Lifetime Benefits

The timing of when you claim Social Security can significantly affect the total benefits you receive over your lifetime. The example below assumes a full retirement age (67) benefit of $3,000 per month and compares outcomes based on different claiming ages and life expectancies.