Sometimes waiting feels like a wrong move. Until it proves to be your best. For example, on June 5, 1944, the Allied forces were ready to launch the largest military invasion in history. However, when the weather got caught up in, General Dwight D. Eisenhower made the high stakes decision to delay D-Day 24 hours despite the heavy pressure to proceed.
That pause changed courses in history.
Certainly, the fate of the world does not depend on your decision to apply for Social Security. But the quality of your retirement may be. And, like Eisenhower’s call, it often comes down to timing.
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Retireers draw income from a variety of sources, but Social Security is still the most commonly cited. According to the Transamerica Center for Retirement Studies, 91% of retirees expect to rely on it. Submitting anytime between the ages of 62 and 70 means differences in monthly checks and significant lifetime checks.
Think of it as the “8-year Social Security Rules.” This is a strategic window into determining lasting profits. Understanding that and getting the right timing will be one of the most valuable decisions when you retire.
Things you need to know about the 8-year Social Security Rules
Most people approaching retirement know that they can either start receiving Social Security as early as 62 or are late to 70. However, fewer people understand the huge impact that this eight-year window could have.
If you submit on a lock of 62 you will get a profit of about 30% lower than what you would get at a full retirement age (typically 66 or 67). Meanwhile, waiting until 70 increases your annual profits by about 8%, you delay, is up to about 132% of your full profits. In terms of dollars, if you are qualify for $1,000 a month at a full retirement age of 66, you’ll be late until 70 increases your monthly check to $1,320.
Despite the benefits, many retirees still argue early. The 2022 Congressional Report found that 62 years old are the most common age to submit, with 29.3% of new retirees doing so. The next popular age was 66 (24.7%), but I waited until I was 70.
However, “8-Year Social Security Rules” do not only apply early or later, but also understand how it will affect your overall retirement income. Preston Cherry, founder of Simultaneous Wealth Management, explained: “Submissions at 62 will result in longer runways but fewer checks. Waiting until 70 will increase your monthly income, but you will need to fill in the gaps.
(Image credit: Getty Images/Leon Neil – Original D-Day Map)
Why timing isn’t just mathematics?
Yes, delaying your profits will give you a bigger monthly check, but that doesn’t always lead to the best lifetime payments. If you don’t expect to live very long due to health concerns or family history, you argue that it could have more economical significance in the past.
“It’s difficult to provide a rule of thumb because individual situations are very different,” said Crark Randall, director of financial planning at Creekmur Wealth Advisors. “That being said, the longer the average life expectancy, the more common trend he or she should apply for Social Security later, and everything is equal.”
Elizabeth Scheiderer, principal and financial advisor at Signal Tree Financial Partners, said more directly. “If you leave because you need cash flow, it’s a “easy” button to collect at 62. Other than that, it becomes complicated. ”
And that gets complicated. Timing has more impact than your benefits. It also affects how tax plans, spousal benefits, and other sources of income are adjusted. “Can I use broker assets or Ross Dollars to cover the gap in a smart way in taxes?” asks Cherry. “Does delay social security reduce the likelihood of large-scale RMDs or help avoid Irmaa Surcharges? Does the broken times align with realistic health and longevity expectations?”
Your age of break-in is the point where the total amount of late, higher payments exceeds the total amount of smaller payments previously received. This is an important part of your decision, especially when considering longevity and cash flow needs.
Working longer may affect your application decision. Randall points out that “while there will be a $1 profit cost for every two dollars earned income in 2025, billing before full retirement age will cost a $1 profit.” It also has an impact on Medicare. Because today, higher incomes can push you into Irma’s territory and increase your future Part B premium.
“There’s a lot of noise there,” adds Cherry. “Some people say, ‘You should always wait until 70.’ “Others say, “If you’re desperate, take it only at 62.” Neither is completely correct, and the idea puts unnecessary pressure on people who need to choose the best one for their individual, not the cleverest sounds on paper or the ones they hear incorrectly on podcasts.
How to make the most of the 8-year rules
The biggest mistake people make is not necessarily being too early or too late. It is making a decision in a vacuum. In fact, a survey by Allianz Life found that 53% of Americans report limited knowledge about social security and how it fits into their retirement plans.
Financial advisors emphasize that social security should not be treated as an independent option. It is a key component of your overall retirement strategy.
That is especially true for married couples. Scheiderer states, “If you are married, one spouse will be collected early and 70 can “hedge” the decision.” Plans for spouse and survivor benefits can have ripple effects on household income for decades. When one spouse dies, the lower of the two benefits disappears, so delaying the claims of higher earners makes sense for long-term security.
For those who have already submitted but are making a second guess, there is the “do it over” option. If you insist early, you can potentially suspend benefits by reaching full retirement age and being able to grow back. Also, if you submit it within the last 12 months, you can withdraw your application to repay the profits and essentially reset your claim.
Ultimately, the best way to make the most of the “8-year Social Security Rules” is to be intentional. Understand trade-offs, plan cash flows, and factor in health, taxes and partner benefits. And like Eisenhower, accept the weight of your decision.
As Scheiderer reminds us, “The only certainty is that you may not know if you have made the right decision. If you have crystal balls in your life expectancy, you will know the exact month you should start collecting.
