7 Things to Settle Before You Claim Social Security
Sam's List Editorial | 2026-08-04
7 Things to Settle Before You Claim Social Security Deciding when to claim Social Security is a permanent trade between how many checks you collect and how large each one is. File early and you get more payments, each one smaller for life. Wait and you get fewer, larger ones. Most people do not actually make that trade. They stop working, notice the income gap, and file. The decision gets made by cash flow rather than arithmetic, and it is close to irreversible. Here are seven things worth settling first. 1. Know Your Full Retirement Age, Not Just Age 62 The short answer: your full retirement age depends on your birth year, and claiming before it permanently reduces your monthly benefit while claiming after it permanently increases it, up to age 70. For anyone born in 1960 or later, full retirement age is 67. Claim at 62 and your benefit is reduced by roughly 30 percent for life. Delay past full retirement age and you earn delayed retirement credits worth 8 percent per year, which stop accruing entirely once you turn 70. Waiting past 70 accomplishes nothing. That reduction and that credit are not temporary. They follow the benefit for as long as you receive it, and they follow a survivor benefit too. 2. Understand the Earnings Test If You Are Still Working If you claim before full retirement age and keep working, the Social Security Administration withholds part of your benefit once your earnings pass an annual limit. This is where most of the internet gets it wrong. The withheld money is not confiscated. When you reach full retirement age, the SSA recomputes your benefit to credit the months that were withheld, which raises your monthly amount going forward. The earnings test is closer to a forced deferral than a penalty. It is still a cash flow problem in the meantime, and the limits change annually, so check the current figure with the SSA rather than a number you read three years ago. Only wages and self-employment income count, not pensions, portfolio income, or withdrawals. 3. Do the Math on How Much of the Benefit Is Taxable Up to 85 percent of your Social Security benefit can be subject to federal income tax, depending on your provisional income, which is your other income plus tax-exempt interest plus half your benefit. The thresholds where taxation begins are $25,000 for single filers and $32,000 for married filing jointly. Those numbers were set decades ago and have never been indexed for inflation, which is why a benefit that was tax-free for your parents is often partly taxable for you. The practical consequence: a large IRA withdrawal or a...
