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Planning to Claim Social Security at 65? You May Need to Rethink That

By Selena Maranjian - Dec 12, 2020 at 9:32AM

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Don't make a critical Social Security decision until you've looked at your big picture.

According to my financial plan, I'll be able to retire when I'm 65 as long as I die the next day. -- Eden Dranger, on Twitter 

That's a terrible financial plan. Few people have retirement plans that bad, but many, if not most, have not yet saved as much as they should. Those are the people -- and you may be among them -- who probably should not claim Social Security at age 65.

A woman is looking wistful at her retirement party.

Image source: Getty Images.

What to expect from Social Security

Before you think about whether you should start collecting Social Security benefits at 65 or not, it's smart to know how much you can expect to receive. It will be a different sum for each of us, and how much you receive from Social Security will depend on your earnings history (and/or that of your spouse). The recent average monthly retirement benefit was $1,523, or a little more than $18,000 annually. If you've earned more than average over your working life, you'll collect more than that, and vice versa.

You can get a much more precise estimate of your future benefits by setting up a "my Social Security" account. Doing so will let you click in any time to see the latest estimate of your eventual benefits, and you'll be able to take care of other Social Security business, too. Note that you can get bigger benefits by delaying collecting them until age 70, and you can start receiving benefits as early as age 62, though the checks will be smaller. When you start collecting makes a big difference in how big your checks are.

Do you or will you have enough to retire on?

Once you have an idea of how much you can expect from Social Security, you'll want to put that sum into context. Do you know how much money you need to retire on? It's worth spending some time figuring out what's likely to be right for you (remembering to factor in a lot for healthcare) -- and then figuring out how you'll amass the sum you need.

To help you put your own situation in perspective, here are some sobering numbers, reflecting median retirement savings in all household accounts for different age groups of Americans:


Median Savings

Millennials (born 1979-2000)


Gen X (born 1965-1978)


Baby Boomers (born 1946-1964)


Source: Transamerica Center for Retirement Studies. 

That's rather frightening, especially considering that so many millions have socked away far less than the sums above and, in many cases, have no savings at all.

A rough calculation to help you estimate how much savings you'll need is this: Take your desired income in retirement from your savings and multiply it by 25. (The number 25 is used because it's the inverse of 4%, an oft-recommended withdrawal rate in retirement.) So if you want to have $50,000 per year in retirement, and you expect $25,000 from Social Security, you'll multiply the remaining $25,000 by 25 and you'll get: $625,000.

Here's how much income different nest eggs might provide if your withdrawal rate is 4%:

Retirement Nest Egg

4% Withdrawal









$1 million


$1.25 million


$1.5 million


Source: Author calculations.

Armed with the information and calculations above, you should have an idea of whether starting your Social Security benefits at age 65 makes sense.

How to improve your situation

If you're starting to hyperventilate, worrying that you're far behind in your savings, know that there are likely some steps you can take to improve your situation. For example:

  • Keep working, for more years than you originally planned. That can help you sock away more, it will give your money more time to grow, and it will mean your savings will have to support you for fewer years.
  • Delay starting to collect Social Security while you work, and aim to delay until age 70, if you can swing that, to maximize your checks.
  • Save and invest more. Find ways to spend less, save more, and earn more, and invest your money effectively.
  • Consider relocating -- to a smaller home and/or a less costly region. You may be able to save a lot on housing, insurance, taxes, and home upkeep that way.
  • Think outside the box: You might look into getting a reverse mortgage to generate some retirement income, or maybe you can borrow from your life insurance policy.

No matter what your financial situation is right now, you can probably improve it -- and build yourself a more secure future -- by taking some steps today. Make a list and take one step at a time.

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