When Should Your Parents Take Social Security?

Introduction

The U.S. Social Security Administration offers and administers retirement income to workers who have paid Social Security taxes on their working income generally for at least 10 years. A worker has the option of deciding when to retire and receive Social Security benefits. The amount of monthly benefits (retirement income) depends on the income history and date of birth of the worker, and on the age at which the worker retires. Readers, particularly students in college, may feel that they are too far removed from retirement for this article to be relevant to them. But they should consider how understanding the situation could help them advise their parents about when to take Social Security.

We consider the decision of a worker contemplating retirement whose benefits depend only on the person's own income record, date of birth, and age at retirement. (We regard retirement as being when a person begins to collect Social Security retirement benefits.) We focus on the decision about when to take Social Security benefits, in terms of the effect on the total amount of benefits that the person can receive over their lifetime.