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When to Claim your Social Security

Social Security provides a wonderful base income for retirees. When to claim is a big decision. If that isn’t enough, the ideal time to claim your benefit is confusing. The Social Security system is governed by 2,728 core rules and thousands of codicils. We help clients work through when is the best time to claim.

Social Security is an annuity that isn’t actuarily sound. Instead, it favors you. It especially favors you delaying your benefit. Your benefit increases by approximately 8 percent every year you delay claiming plus a cost of living increase. This increased benefit is risk-free.

Your Social Security benefit is particularly valuable if:

  • Inflation is high
  • Market returns are poor
  • You have longevity in your family

These qualities make Social Security a great diversifier to the portfolio-based part of your retirement income. This is because the three factors that are worst for portfolio-based income are when inflation is high, market returns are poor, and retirement lasts a long time

Some don’t delay because they focus on the “breakeven date” and if they will live that long. The breakeven date is when your increased benefit from delaying claiming makes up for forgoing the payment you would have received by claiming earlier.

At Chapman Capital, we wake up every day thinking about how to make our clients more financially secure. So, we worry about the “broke date,” the date you can’t pay all your bills because you took benefits too early.