April 2025 Newsletter: 62, 67, or 70—When Should You Apply For Social Security?

On January 31, 1940, Ida May Fuller of Ludlow, Vermont, was the first person to receive a Social Security check. That historic payment amounted to $22.54. Before retiring in November 1939, she served as a legal secretary and contributed to Social Security for about 2½ years. Total taxes paid: $24.75.

Before passing away in 1975, she had collected $22,888.92 in benefits.

Today, more than 73 million people receive some type of Social Security benefit, including supplemental income and disability benefits.

Nearly 55 million people are receiving retirement benefits, according to the Social Security Administration, with an average monthly benefit of $1,931 (Retired workers: $1,981; spouses of retired workers: $932).

Most folks are eligible for Social Security. How much you are entitled to receive depends on your highest 35 years of indexed earnings and the age you apply for benefits.

Table 1 highlights when you are eligible to receive full Social Security benefits. For example, if you were born in 1958, you are eligible to receive your full benefit at age 66 and 8 months.

Table 1: Full Retirement Age
What year were you born?	Full retirement age
1957 or earlier	You are at full retirement age
1958	66 + 8 months
1959	66 + 10 months
1960 or later	67

Source: SSA.gov

Under current law, the full retirement age no longer rises for those born after 1960.

File today or delay?

You can begin collecting benefits when you turn 62 years old. But is that a wise decision?

Tom was born in 1963, and he just turned 62. He is eligible for Social Security.

If Tom waits until 67, he will receive a monthly payment of $2,000 based on his income. If, however, he files for benefits at 62, his monthly check would be 70% of the full benefit or $1,400 per month.

Table 2: The longer Tom waits, the larger the monthly benefit
Age to begin receiving benefits	Monthly benefit	Percentage of full benefit received
Age 62	$1,400	70.0%
63	$1,500	75.0
64	$1,600	80.0
65	$1,733	86.7
66	$1,867	93.3
67	$2,000	100.0

Source: SSA.gov

If Tom were born in 1958, his benefit at 62 would be 71.7%, and 70.8% if born in 1959.

Continuing with our original example, can Tom delay benefits past 67? Yes, and he’ll be entitled to a larger monthly check (Table 3).

Table 3: Delaying Tom’s benefits
Age to begin receiving benefits	Monthly benefit	Percentage of full benefit received
Age 68	$2,160	108.0%
69	$2,320	116.0
70	$2,480	124.0

Source: SSA.gov

Tom may also file at any time during the year, and his monthly check will be pro-rated (in twelfths).

The percentage is similar for those born in 1958 and 1959.

For example, the full retirement age is 66 years and 8 months if born in 1958.

Delaying until 69 and 8 months earns the individual 124%. He or she will reach a maximum of 126.7% of the full retirement benefit at the age of 70.

You will not accrue additional benefits beyond your 70th birthday. Unless there is a compelling reason to delay benefits, it’s best to begin collecting when you turn 70.

A bird in the hand or two birds in the bush?

“I’m eligible for monthly benefits. Should I file today or delay?”

Filing for Social Security at 62 will result in a permanently lower monthly benefit over a longer period. Wait until 70, and you maximize your monthly payment, but you’ll receive fewer checks.

Moreover, if you are working and under full retirement age, your benefit may be reduced.

Many variables can be inputted into the calculation. There is no magic formula. It’s a personal decision and can be complex.

Conventional wisdom suggests that if you don’t need the money today, consider delaying as long as you can. But it’s not always that simple.

Basic guidelines

What are your cash needs? Are you still working? If you are, does your monthly income meet or exceed your expenses? If so, it may be wise to delay.

If you have retired, could you consider working part-time? However, if you have fewer resources and can’t work, your options may be limited.

Additionally, there are considerations regarding life expectancy and health. When a male turns 67, Social Security estimates life expectancy at 82.63 years. For a female, that rises to 85.23 years (Social Security 2024 Trustees report 2021 life table).

Claim early

You simply want to retire, and Social Security, combined with savings, enables you to do so.

Are you in poor health, or are you battling a chronic health condition? If so, it may be advantageous to claim early.

The breakeven is roughly between 78 and 82 years old but can vary based on factors such as cost-of-living adjustments.

Claim later

You enjoy working. That’s what gets you up in the morning. Sure, the income is a motivator, but you don’t dread Monday mornings.

The future is unknown, but you are in good health, and your family history suggests a longer life expectancy.

You have other sources of income, such as rental properties, a pension, consulting income, or a part-time gig. Put another way, you wouldn’t mind the extra cash from Social Security, but it’s not needed.

The bridge between retirement and 70

What if you retire before age 70 but want to wait until age 70 to apply for benefits?

You have savings, but your cash inflow has been reduced. Your bills are a priority, and a reduced cash inflow must be made up somewhere.

Making larger withdrawals from your retirement portfolio is an option, but it will result in a smaller nest egg to appreciate as you age.

So, how can you bridge the gap? Is your spouse still working? Can you reduce expenses? Do you have a pension that can help cover the gap between retirement and age 70?

These are just some of the factors that come into play.

What about your spouse?

Your spouse may claim benefits based on a husband’s or wife’s earnings as long the person is 62 or older, and the person’s spouse is already receiving a monthly Social Security check.

Your full spouse’s benefit could be up to one-half the amount your spouse is eligible to receive at their full retirement age. If you receive your spouse’s benefits before you reach full retirement age, your payment will be permanently reduced.

However, your maximum spouse’s benefit remains 50% of the full retirement age benefit, not their higher amount, including delayed retirement credits. For example, if the higher earner’s full retirement age benefit is $2,000, the spousal benefit is capped at $1,000 (50%). If the higher earner waits to 70 and their benefit increases to $2,400, the spousal benefit remains at $1,000.

Yet, if you need Social Security sooner, the lower-earning spouse can file based on their income, which allows the higher-earning spouse to delay. When the higher earner begins to collect, the lower earner is eligible to switch to a higher spousal benefit, assuming, of course, the spousal benefit is higher.

Summary

Your decision will be based on many factors.

That said, you’re not expected to make this decision alone. Your financial professional understands the complexities involved, and they can help you evaluate various scenarios tailored to your circumstances.

Ultimately, the decision is yours. It’s personal, but I’m confident your financial professional would be happy to assist you if you have any questions.

Tariff time

What is a tariff? The International Trade Administration defines a tariff as “a tariff or duty (the words are used interchangeably) is a tax levied by governments on the value including freight.”

This tariff, or tax, is “paid to the U.S. Customs and Border Protection Service at the border by a U.S. broker representing a U.S. importer, say, Costco,” according to The Tax Policy Center.

Using a simple example, if 20 toasters are entering the United States and each is valued at $50, including freight, the total value of the toasters is $1,000. If a tariff is 20%, the U.S. broker will pay a $200 tariff (tax) to the U.S. Customs and Border Protection Service.

In our example, Costco’s cost is $1,200, including the newly levied tariff. Prior to the imposition of the tariff (assuming the toasters entered the U.S. duty-free), Costco would have paid $1,000 to the importer.

So, ultimately, does the burden fall on Costco, the foreign manufacturer, or the U.S. consumer? Or, will the tariff be shared?

This question has enormous implications.

Let’s review the results of tariffs levied during the first Trump administration.

Who’s Paying for the U.S. Tariffs? A Longer-Term Perspective “found that in most sectors, U.S. tariffs have been completely passed on to U.S. firms and consumers.” Regarding steel tariffs, “foreign countries (bore) close to half the cost.”

A paper published by the National Bureau of Economic Research reflected comparable results. The study also noted “more mixed evidence regarding retail price increases, which suggests that many U.S. retailers reduced the profit margin on affected goods.”

If enacted, today’s tariffs are expected to be significantly broader than those imposed in 2018. Consequently, we might expect major retailers to aggressively negotiate concessions with foreign suppliers. But they may also attempt to pass along as much of the tariff as possible.

Several major retailers, including Walmart, Target, and Best Buy have warned that consumers may face higher prices.

Perhaps they are laying the groundwork, preparing consumers for the inevitable—higher prices. If these are one-time price hikes, investors may simply look past them. If we see a secondary round of increases, the situation becomes more tenuous.

While retailers recognize that many have grown weary of higher prices, in today’s inflationary environment, it may be easier to pass along higher costs if falling consumer sentiment doesn’t deter buyers.

Tariff motivation

Are tariffs about rebuilding the U.S. industrial base, raising revenue, or using the threat of tariffs as a bargaining chip (although that seems less likely at this point)?

Since 2000, U.S. industrial production has increased by 14%, while manufacturing production, which excludes utilities and mining, has risen by about 4%, according to the St. Louis Federal Reserve. During the same period, Gross Domestic Product (GDP), which is the broadest measure of goods and services for the economy, is up 70%.

Given efficiencies and changes in the mix of products produced, manufacturing employment over the same period has declined by 26%, according to the U.S. Bureau of Labor Statistics.

Free trade has been a big benefit to consumers who have access to a broad array of products at lower prices.

However, free trade has also forced businesses at home to either relocate production overseas, where it’s cheaper to produce goods, or close altogether.

Bottom line

Investors have not welcomed the possibility of tariffs.

Table 4: Key Index Returns
	MTD%	YTD%
Dow Jones Industrial Average	-4.2	-1.3
NASDAQ Composite	-8.2	-10.4
S&P 500 Index	-5.8	-4.6
Russell 2000 Index	-7.0	-9.8
MSCI World ex-USA*	-1.1	5.5
MSCI Emerging Markets*	0.4	2.4
Bloomberg Barclays U.S. Aggregate Bond TR USD	0.0	2.8

Source: Wall Street Journal, MSCI.com, MarketWatch, Bloomberg
MTD returns: February 28, 2025–March 31, 2025
YTD returns: December 31, 2024–March 31, 2025
*in US dollars

Investors are fretting that higher inflation may slow rate cuts by the Federal Reserve. Furthermore, consumer reluctance to purchase higher-priced goods could slow the economy and hinder profit growth.

Final thoughts

Market pullbacks aren’t unusual. They are to be expected.

Since 1980, the average intra-year pullback in the S&P 500 Index has been 14%, according to LPL Research. So far, the S&P 500 has shed 10.1% through the recent low on March 12th.

A diversified portfolio cannot completely shelter you from market pullback, but it helps reduce volatility while tapping into the wealth-creating potential that stocks have offered over the long term.

What has worked?

Historically, a disciplined approach helps strip the emotional component out of investing. You know, the urge to sell when the market is falling or the impulse to ramp up risk and dive headfirst into stocks when the market is summiting new highs.

What hasn’t worked?

Timing the market. No one can consistently exit stocks near a high and re-enter near a low.

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I trust this review has been informative. If you have any questions or would like to discuss other matters, please feel free to contact me or any team member.

Thank you for choosing us as your financial professionals. We are honored and humbled by your trust.

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