Q & A

Ask Rusty – When Should We Claim Social Security?

Dear Rusty: I am almost 63 and my husband will be 61 soon, and we are looking to see when our best time would be to start our Social Security benefits.  We would like to know if one of us qualifies for benefits from a previous marriage from 1984 to 1995. And we are wondering if I can start drawing at age 65, in two years, or if it is better that I wait until 67 because my spouse is 2 years younger than me. Also, if I were to continue working limited hours after 65, what would my earning limit be?  Signed: Almost Ready

Dear Almost Ready:  The first thing to understand is that full retirement age (FRA) for both of you is 67. If either of you claim before that, your monthly benefit amount will be permanently reduced and, because you are working, you will be subject to Social Security’s “earnings test.”

If you claim your benefit at age 65 your monthly payment will be about 87% of what you would get if you claimed at age 67. If your husband claims at age 62, his benefit will be about 70% of his FRA amount. The only way to get 100% of the benefit you’ve each earned from a lifetime of working is to claim at your FRA. You can choose to claim at age 65 as long as you’re comfortable with the benefit reduction which will occur, and as long as your annual work earnings do not significantly exceed the earnings limit for that year. In any case, when each of you claims will not affect the other’s retirement benefit amount. 

Social Security’s “earnings test” for those claiming before FRA sets a limit for how much can be earned before some (or all) benefits are taken away. The earnings limit for 2024 is $22,320, but it changes yearly. If you claim early benefits and your work earnings exceed that year’s limit, Social Security will take away $1 in benefits for every $2 you are over the limit. They take away by withholding future benefits long enough to recover what you owe for exceeding the limit. If you significantly exceed the annual earnings limit, you may be temporarily ineligible to receive SS benefits until you either earn less or reach your FRA (the earnings test no longer applies after you reach your FRA). I cannot predict what the earnings limit will be two years from now, but it will be more than the 2024 limit and published at that time. FYI, in the year you turn 67 your pre-FRA earnings limit will be much higher, and when you reach your FRA the earnings test no longer applies. 

Regarding your previous marriage, you cannot receive spousal benefits from an ex-spouse while you are currently married. But when to claim may also be influenced by whether either you or your current spouse will get a spousal benefit from the other. If the FRA (age 67) benefit amount for one of you is more than twice the other’s FRA entitlement, the one with the lower FRA amount will get a ”spousal boost” to their own amount when both of you are collecting.

Spouse benefits reach maximum at one’s FRA, but each person’s personal SS retirement amount will continue to grow if not claimed at FRA. Waiting past FRA to claim allows the SS retirement benefit to grow by 8% per year, up to age 70. So, with an FRA of 67, claiming at age 70 will yield a payment 24% higher than the FRA amount, 76% more than the age 62 amount, and about 37% more than the age 65 amount. But waiting beyond FRA is only smart if financially feasible and life expectancy is at least average (about 84 and 87 respectively for a man and woman your current ages). And, as a general rule, if one’s spousal benefit at FRA (50% of their partner’s FRA entitlement) is highest, then that spouse should claim at FRA to get their maximum benefit. 

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at [email protected].

Comments On This Topic

  1. I am 74 years old and retired receiving SS. My wife will be 65 in January of 2025. Our hope was to start paying off some credit card expense by her receiving SS when she turns 65 however it appears there would be a substantial deduct. Her income is $37,500 a year.
    She wasn’t planning on retirement at age 65. Because I am 11 years older we fell it makes sense for us to use SS and a means to lower our debt.
    We have $27,000 in cc debt and I don’t really want to use my 401k funds due to taxes and we pretty much live on my SS and pension.
    I appreciate any suggestions.

    • John,
      Your wife’s full retirement age (FRA) for Social Security purposes is age 67. Because she will not yet have reached her FRA in January 2025 (when she is 65), if she claims SS to start at that time, she will be subject to Social Security’s annual earnings test. The earnings test sets a limit for how much can be earned by beneficiaries who claim SS early. The earnings limit for 2024 is $22,320. The limit for next year is not yet published (it’s based on changes to the national wage index) but will be a bit higher – likely about $23,500. Thus, I can’t provide the exact impact, but if your wife’s 2025 earnings exceed that year’s limit, Social Security will take back $1 in benefits for every $2 over the limit (half of the amount over the limit). So, if your wife earns $37,500 per year, that will likely be about $14,000 over the limit and Social Security will take back half of that ($7,000). They “take back” by withholding future benefits, or you can pay repay them in a lump sum. So you will have a choice – repay Social Security from your other assets, or they will withhold your wife’s SS benefits for the number of months needed to offset the penalty for exceeding the earnings limit. The number of months they will withhold depends on how much is owed and what your wife’s monthly SS benefit is. For example, if your wife’s age 65 SS benefit is about average ($1,900) and her penalty for exceeding the limit is $7,000, Social Security would withhold your wife’s benefit for 4 months to recover the penalty – but she would receive her full benefit for the remaining 8 months of the year.
      Unless your wife tells them in advance that she will exceed the limit, they will find out the following year after you file your income taxes but, in any case, your wife cannot avoid the annual earnings test for working before reaching her full retirement age. The earnings test goes away after your wife reaches her FRA of 67. Until that time, if she continues working she will have a choice to have her benefits withheld for a portion of the year, or simply repay Social Security in a lump sum (in which case her benefits would continue uninterrupted).
      FYI, there is some silver lining in this, because if your wife has benefits withheld because she exceeds the earnings limit before her FRA, after she reaches her full retirement age Social Security will give her time credit for all months benefits were withheld, which will result in her monthly Social Security payment amount increasing somewhat. Thus, over time, your wife may recover all benefits which were withheld for exceeding the annual earnings limit.
      Russell Gloor
      Certified Social Security Advisor
      The AMAC Foundation

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