Ask Larry

Is There Any Reason Not To Start My Benefits Early?

Hi Larry,

I have decided to begin my social security benefits at my full retirement age of 66. My birthday is in September, and since social security instructs you to file 4 months prior to that, I did so recently, choosing September as the month to receive my first payment.

A representative from the Social Security Office called and asked if I instead didn't want to start my payments in June instead of September. That it would be a difference of $39 month, meaning by the time I receive my first payment in October I would have already collected $9,172, which would take 19 year and 4 months to make up.

Is there any reason not to do this besides the loss of $39/month after 19 years?

I am divorced and spousal benefits do not apply.


Hi Mary,

We don't recommend using breakeven analysis for the reasons outlined by Larry in his answer to Carlos in the 'Break Even Analysis' topic on this page. Besides that, though, the math described in your question doesn't sound accurate. In order for you to be due a total of $9172 in 4 months, your reduced monthly rate would need to be $2293. And since the percentage reduction for starting benefits 4 months prior to full retirement age (FRA) is approximately 2.22%, that would mean that your FRA rate would have to be $2346 in order to produce the reduced rate of $2293. That means the reduction in your monthly benefit rate would be $53, not $39.

It could be that the SSA representative was referring to starting your benefits effective with June, which would mean that you'd be paid your first check in July. That might account for the reduction only amounting to $39, but you would then only be receiving 3 months of early benefits instead of 4, which would likely amount to something more like $6879 as opposed to $9172. Either way, the up front money you'd get would only put you ahead of the game for 12 to 15 years (not 19+ years), and after that you'd be losing money every month for as long as you live.

That said, when you choose to start drawing your benefits is entirely up to you. However, you may want to strongly consider using our maximization software so that you'll know the true long term effects of your decision. Furthermore, if you were married to your ex-spouse for at least 10 years you may have even better options available to you.

Best, Jerry

Jul 2 2018 - 1:49pm
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