Social Security gives everyone an official “Full Retirement Age.” It’s 67 for those born in 1960 or later, but you can claim as early as age 62, as late as age 70, or anywhere in between. The tradeoff is between a lower monthly benefit for more years and a higher monthly benefit for fewer years. The uncertainty lies in how long you’ll live.
Whenever there are choices and uncertainty, people try to optimize. Everyone is looking for the holy grail — when to claim Social Security to maximize the benefits. But how much does it matter, anyway?
Open Social Security
If you’ve paid attention to this matter, you’d know Open Social Security. It’s the best tool for a Social Security claiming strategy, and it’s completely free.
The primary input in Open Social Security is your Primary Insurance Amount (PIA), which you obtain by creating an account with the Social Security Administration, copying your earnings history, and pasting it into ssa.tools. See more detailed steps in Retiring Early: Effect on Social Security Benefits. If you’re married, both of you should go through this process to get your separate PIAs.
Open Social Security uses your PIA, marital status, gender, and date of birth — and the same for your spouse if you’re married — to calculate a recommended strategy. For example, it produced this output for someone single, male, born on 4/15/1960, with a $3,000 PIA:
You file for your retirement benefit to begin 10/2025, at age 65 and 6 months.
The present value of this proposed solution would be $416,562.
Open Social Security tells you exactly when to claim Social Security, which is great, but don’t stop there. Otherwise, you’ll miss this calculator’s best feature.
Spectrum Chart
Scroll down to the bottom of the page. You see a spectrum chart showing how much the present value of the benefits would change if you start your Social Security on other dates. As you move the mouse along the spectrum chart, the tooltip shows a percentage of the maximum for that start date.
Open Social Security recommends claiming immediately in this example, but the spectrum chart shows that this person would still get 99.3% of the maximum present value if they wait another year. And the worst case for this person? Claiming at age 70 gets 95.2% of the maximum present value.
The spectrum chart and the total present value answer this critical question:
How much does when to claim Social Security matter?
The total present value of Social Security benefits claimed at the most optimal time is $416,562 for this person in the example. This tells them how much Social Security plays a role in their retirement finances. If this person has a $1 million net worth, Social Security represents close to 30% of the total. Claiming at the worst time and getting 95% of the maximum present value decreases the total by 1.5%. I’m not suggesting that one should throw away 1.5% willy-nilly, but I would say it’s well within the margin of error.
Heat Map
It’s more complicated for a married couple. The one-dimensional spectrum chart for a single person turns into a 2D heat map for a married couple. I ran another case as an example, which produced this chart:
The horizontal axis represents one spouse, and the vertical axis represents the other spouse. The recommended strategy is at the bottom right. One person should delay until age 70, and the other person should claim as soon as possible, which is a common strategy for many married couples. The maximum net present value of their benefits is about $800,000.
The green and blue zones at the lower right of the heat map indicate that this couple has significant leeway in when to claim. As long as one person claims early, the other person can claim at any time within a 3-year range (going horizontally at the bottom), and they would still get more than 95% of the maximum present value. Or as long as one person delays until 70, the other person can claim at any time within a 5-year range (going vertically at the right edge), and they would still get more than 95% of the maximum present value.
The magenta patch in the middle represents the worst combinations of claiming dates. If they didn’t know any better and they picked the absolutely worst claiming dates, they would get 89.5% of the maximum present value.
How much claiming dates matter for this couple depends on how much they have outside Social Security. If they have a $1 million net worth, Social Security represents close to 45% of their total resources ($800k over $1.8 million total). Choosing the worst claiming dates would put a 4.5% dent in their retirement, which is more meaningful than the 1.5% in the previous example, but if they can keep it above 95% in the blue and green zones, I would say that the effect of claiming dates falls well within the margin of error.
Shifts in Strategy
Open Social Security uses a market interest rate to calculate the present value of the Social Security benefits. Interest rate changes can affect the recommended claiming strategy. Sometimes people are surprised to see a big shift in the recommendation when they run the calculator again at a later time. For example, it used to recommend claiming at age 70, and now it recommends claiming at 68.
I wouldn’t worry about it if the previous recommendation is still within the blue and green zones. The point of using Open Social Security isn’t to get a single “best” claiming strategy. Mike Piper, the creator of Open Social Security, said this in his blog post in 2020:
What matters most isn’t picking the very best strategy. What matters most is just avoiding a really bad one. There are usually plenty of strategies that are practically as good as the very best strategy.
Open Social Security uses mortality tables for the probability of your living to each age. As good as it is, it still only calculates based on probabilities. No calculator knows when you’ll die. The best strategy from any calculator won’t be the best if you defy the probabilities.
Make It Not Matter
Here’s how I would use Open Social Security with my Make Fewer Things Matter approach:
1. Read the maximum present value output from Open Social Security. Calculate its weight in the total retirement resources.
Social Security / (Social Security + Non-Social Security)
2. Take note of the green and blue zones in the heat map. All claiming dates in the green and blue zones give above 95% of the maximum present value. Look for the worst case as well.
3. Combine (1) and (2) to realize the large leeway in when to claim Social Security.
Claiming dates don’t matter as long as you stay in the green and blue zones in the chart. Write down where your green and blue zones are. Save the chart image if you’d like.
Even the worst dates don’t matter if (a) the weight of Social Security is sufficiently small in your total retirement resources; and (b) the worst dates still give you close to 90% of the maximum.
Of course, you don’t choose the worst dates on purpose, but it’s a relief to know how little it matters, and it’s not possible to screw up too badly. You pick a spot in the green and blue zones, cross it off your mind, and move on to more important matters.
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abc says
I spent time with the available free calculators and my own spreadsheets trying to figure out the best time to take Social Security (SS). Playing with the calculator you quickly learn that forecasting your demise was the key – something most of us don’t know how to do. Finally, my approach was to ask myself what I wanted to have SS do for us. I am seven years older than my wife, my wife was the lower wage earner, and we have other resources
The answer as to what we wanted SS to do for us was to provide protection in two areas. The first was to cover the event that I die early. The second was to cover both of us living long lives.
Without a calculator, the obvious decision was for both of us to wait until 70 to take SS.
Each person should take time to evaluate when to take SS. However, start by asking yourself (and, if you have one, your spouse), what you want SS to do for you, when taking into consideration your personal life and resources. You may get the answer without a calculator.
Remember, the calculators don’t give you the right answer – they give you an answer based on your time of death guesses. The right answer will only be known after you die, so don’t chase your own tail too hard.
JT says
Determining the NPV using a real discount rate such as 20 or 30 year TIPS is critical to determine where the break-even points are for both SS and Roth conversions.
In my case, the SS B/E with a 0 rate like many online calculator use indicated B/E in early 80’s for any claiming age between 62 and 67 but a 2.x% discount rate pushes it out by a decade.