Dear Rusty: I am 64 years old and having difficulty working due to my arthritis, but I can continue part time as a podiatrist. I do not know the best way to determine when to retire. What is the formula or a way to determine which is a better choice?

Signed: Undecided

Dear Undecided: There is a difference between deciding when to retire from working and deciding when to claim your Social Security benefits. For the former, you should consult with a certified financial advisor, but I’ll inform you on how Social Security fits into your personal circumstances. In deciding when to claim Social Security, you should look at your financial needs, your life expectancy, your work status, and your marital status. There is no one formula right for everyone because everyone’s circumstances are different, but here are some things to help decide what is right for you.

• The Social Security program has an “earnings test” that applies to people who collect Social Security (SS) before reaching their full retirement age (FRA). Your FRA is 66 years and 8 months, and that is the point at which you receive 100 percent of the SS benefit earned from a lifetime of working. If you collect SS before your FRA and continue to work, there is a limit to how much you can earn without jeopardizing your benefits. For example, the earnings limit for 2023 is $21,240, and if that is exceeded, the Social Security Administration (SSA) will take away benefits equal to $1 for every $2 you are over the limit. It “takes away” benefits by withholding future payments until the agency recovers the penalty for exceeding the limit. If your earnings are substantially over the limit, you will be ineligible to collect Social Security until either your earnings are lower, or you reach your FRA. 

• If you claim Social Security before your FRA, your benefit amount will be permanently reduced. If, for example, you claim SS to start at age 65 your monthly benefit will be about 89 percent of what it would be at your FRA. That reduced benefit would not change thereafter except for cost-of-living adjustments (COLA) usually granted annually.

• If Social Security will be a major part of your retirement income, then waiting to receive a higher monthly benefit may be a prudent strategy for you. The longer you wait to claim the higher your benefit will be. Your SS benefit will continue to grow until you are 70 years old, and at age 70 your monthly benefit will be about 27 percent more than it would be at your FRA. 

• Life expectancy is a key factor in deciding when to claim Social Security. If you claim at age 70 instead of at your FRA, you will need to live until you are about age 83 to break even moneywise. If you live even longer than that, then waiting until 70 will yield the highest monthly amount and the most in cumulative lifetime benefits. But if your anticipated life expectancy is lower, claiming earlier may be a better choice. 

• If you are married and expect your wife to survive you, consider that the benefit your wife can receive as your widow will be based on your SS benefit when you die. Thus, the longer you wait to claim the more your wife’s benefit as your widow may be. If you predecease your wife, her benefit will be based on the amount you were receiving at your death, if that is more than her personally earned SS benefit.

So, as you can see, deciding when to claim Social Security is a decision to be made after carefully evaluating your personal circumstances, as described above.        

Russell Gloor is a national Social Security advisor at the AMAC Foundation, the nonprofit arm of the Association of Mature American Citizens (AMAC). The 2.4-million-member AMAC says it is a senior advocacy organization. Send your questions to: ssadvisor@amacfoundation.org.

Author’s note: 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). The NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity.