Ask Rusty – Should I Take Social Security Even If I Don’t Need It?

Published 12:00 am Sunday, December 26, 2021

Dear Rusty: I am 66 years plus 8 months old, am still working making six figures, and can support myself. I’m a healthy, self-employed single woman and have a State Pension (from a divorce settlement). I will work part time, probably through next year and until I am 70 years old or more. What should I do about my Social Security – take it or “bank it” in Social Security? Signed: Fully Independent Lady

Dear Fully Independent: When to take your Social Security is always a personal choice which should look at your health, life expectancy and need for the money at this time. Since you imply that you don’t really need the money at this time, you might choose to simply wait until age 70 to claim, which will give you both the highest possible monthly benefit in your later years, as well as the most in cumulative lifetime benefits if you enjoy at least average longevity.

Statistically, according to Social Security, a healthy woman your current age will, on average, live to about 87. If you wait until age 70 to claim (vs. claiming now) your benefit will be about 30% higher and you’ll breakeven money-wise when you’re about 83. Depending upon your benefit amount and how long you live, that could give you tens of thousands of dollars more in benefits during your later years, and that higher monthly SS benefit would be a good hedge against future inflation.

Keep in mind too that, at your current income level, up to 85% your Social Security benefits will become part of your taxable income. Even if you are only working part time, your combined income from all sources (including half of your SS benefits) will cause a minimum of 50% of your SS benefits for each tax year to become part of your taxable income at your normal IRS tax rate. The point being that the amount of your SS benefits which will be taxed by the IRS is related to your overall income, so there are tax advantages to waiting to claim until your income is lower.

We can only advise you on your Social Security options. If you wish to consider claiming your SS earlier and investing those benefits, you should seek the services of a Certified Financial Planner who can discuss your investment options, your risk tolerance and possible rate of return. From a Social Security standpoint, waiting until age 70 will maximize your benefit amount and, if you enjoy at least average longevity, reduce your “longevity risk” (the risk you might outlive your money). It will also yield the most in lifetime SS benefits. But, in the end, only you can make that decision after carefully considering all your options.

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 ssadvisor@amacfoundation.org.