UBCNews - Business - Early Retirement Planning: When Should You Claim Social Security?

Episode Date: February 25, 2026

Welcome back, everyone. Today we're tackling something that keeps a lot of people up at night—early retirement and the big question: when should you actually claim Social Security? I mean, the decision can literally shape your entire retirement income. So, to help us break this down, I've got a guest who knows this stuff inside and out. Welcome! Melia Advisory Group City: Tulsa Address: 5424 S Memorial Dr Website: https://www.meliagroup.com/

Welcome back, everyone. Today we're tackling something that keeps a lot of people up at night, early retirement, and the big question, when should you actually claim Social Security? I mean, the decision can literally shape your entire retirement income. So to help us break this down, I've got a guest who knows this stuff inside and out. Welcome. Thanks for having me. Yeah, this is one of those topics where conventional wisdom doesn't always apply to everyone. A lot of folks assume waiting until 70 is always the best move. But that's simply not the case for everybody. Right, exactly. So let's start with the basics. What should people approaching retirement age really be aware of regarding early retirement and social security? Well, the first thing to understand is that your social security benefits are based on two main factors. Your earnings history and the age you decide to claim.

If you claim at 62, which is the earliest you can, you're typically looking at a permanent reduction of around 25 to 30 percent. compared to your full retirement age benefit. Wow, that's a pretty significant cut. It is. On the flip side, if you delay until age 70, your monthly payments can increase by roughly 8% for each year you wait past your full retirement age. So there's this balance between getting money sooner

versus getting more money later. Mm-hmm, make sense. But here's what I'm curious about. When does early retirement actually make sense? because I've heard some recent research suggesting that claiming early can sometimes be the smarter move. You're touching on some fascinating new findings. Vanguard recently published research showing that for certain individuals, claiming Social Security early can actually be more advantageous.

This is especially true for people who have substantial assets and aren't at risk about living their money. So we're talking about high net worth individuals here? Exactly. Or folks with shorter life expectancies, or even those with pensions that cover all their expenses. For these people, the focus shifts from longevity risk, you know, the risk about living your assets,

to legacy planning and maximizing what they can pass on to loved ones. I see. Go on? When you claim early, you reduce how much you're drawing from your investment portfolio in those early and middle retirement years. That can preserve more assets for your heirs. Plus, there are some tax benefits. Claiming early spreads your taxable social security. income over more years, which can reduce your annual tax burden and even help you avoid higher

Medicare surcharges. That point about Medicare surcharges really sets up our next piece, how taxes and health care costs interact with your claiming strategy. But first, a quick word from our sponsor. Planning for early retirement means making smart decisions about social security. Malia Advisory Group offers personalized social security analysis services. to help you determine the optimal time to claim your benefits. With over 50 years of combined experience, they guide individuals through earnings records, spousal benefits,

and how Social Security fits into your overall retirement income plan. Free consultations are available by phone, Zoom, or in-person. Learn more at meliagroup.com. Picking up on those Medicare surcharges, how do higher incomes from other sources affect what retirees actually pay for health care? Great question. A portion of Social Security benefits can be subject to federal income tax

if your combined income exceeds certain IRS thresholds. And if you're pulling large distributions from retirement accounts while also taking Social Security, that can push you into higher Medicare premium brackets. So the timing of when you claim can actually help you manage those costs over the long run. So this goes beyond one person's decision. It's really a household strategy. Absolutely, and it ties into understanding your full retirement age, which is critical. For anyone born in 1960 or later, that's age 67. Claiming before or after that age significantly impacts your monthly benefit amount. You also want to consider how Social Security fits with your other income sources, like IRAs or 401Ks.

Right, and I imagine trying to figure all this out on your own can feel like doing taxes with one hand tied behind your back. Huh, yeah, that's a good way to put it. The complexity is real. A coordinating spousal benefits is one of those strategies that can really maximize your combined lifetime benefits as a couple. Married couples can use staggered claiming decisions, so maybe one's spouse claims earlier while the other delays. This can provide immediate cash flow while still allowing one benefit to grow. Okay, so let's talk about recent changes. Have there been any updates to the rules that might affect someone's claiming decision. Yeah, there have been some important shifts. Back in 2016, the file and suspend strategy was largely eliminated. That used to let one spouse claim spousal

benefits while their own benefit grew, but that option is mostly gone now for new claimants. So that door closed. Right. More recently, legislation like the Secure Act 2.0, signed into law in December 2022, introduced changes to retirement accounts by raising the age for required minimum distributions. For those who turned 72 after December 31st, 2022, the RMD age increased to 73, and it will further increase to 75 in 2033 for individuals who turned 74 after December 31, 2032. While that's not directly about Social Security, it affects your overall retirement income strategy and can influence when it makes sense to start claiming. Interesting, yeah. And Social Security benefits do adjust for inflation, correct?

They do. There are annual cost of living adjustments or colas to help benefits keep pace with inflation. That's one of the reasons Social Security is such a dependable income source. It's inflation protected and lasts for life. So to everyone listening, have you thought about how your claiming decision fits into your bigger financial picture? Because it sounds like there's no universal answer here. Definitely. The optimal age to claim is highly individualized. or to put it another way, what works for one person may be completely wrong for someone else. It depends on your health, your financial needs, your projected life expectancy, and honestly, your personal priorities. I remember working with a client a few years ago who had substantial savings and was really healthy.

He wanted to travel early in retirement, so claiming at 62 gave him the cash flow to do that without touching his investments heavily. That's a perfect example of how personal circumstances drive the decision. Exactly. Some people prioritize immediate access to funds, while others are more focused on maximizing lifetime benefits or leaving a legacy. There's also the behavioral side. Many folks just value a dollar today more than a dollar tomorrow. And that psychological aspect matters too. Right. So if someone's unsure about when to claim, what should they do? Professional advice is really recommended. The complexity of the social security system

with all the variables like spousal coordination, taxes, Medicare implications, it's a lot to work through a loan. Working with a financial or tax advisor can help you model different scenarios and see how each claiming age impacts your overall plan. That makes total sense. You can access your social security statement online

and use calculators, but having an expert help you interpret that data is invaluable. For sure. And remember, strategies to maximize benefits include things like improving your earnings record by working a bit longer, applying at the optimal time, and integrating Social Security into your broader retirement income plan. All of those pieces need to work together. So we've established that early claiming can work for some,

delaying works for others, and the key is understanding your unique situation. Any final thoughts? Just that this decision is deeply personal, consider your lifestyle, your health, your financial goals, and don't be afraid to seek guidance. The right strategy for you is the one that aligns with your needs and helps you enjoy retirement on your terms. Beautifully said, thanks so much for breaking this down with us today. And to our listeners, if you're working through these decisions, remember, understanding your options is the first step to a secure retirement. Until next time.