Social Security Timing: When Should Disney Employees Claim?
Many people tell me, “I’m just going to take Social Security as soon as possible because I don’t know if it’s going to be around. I don’t know if I’m going to be around, and I just want to take it right when I retire.”
I certainly understand this thought process. It’s a realistic view of the world. Disney cast members have spent years in either corporate or guest-facing roles, have had a good, long look at how things work.
However, I want to caution anyone considering claiming Social Security early. There are several important factors to consider before making this significant decision. What you choose could impact your financial well-being for decades to come.
Understanding the Social Security Break-Even
When thinking about when to apply for social security benefits, it’s essential to understand the concept of a “break-even” point in relation to your life expectancy.
Quick example
Let’s say your Social Security benefit at 62 is around $1,500 per month. If you wait until full retirement age, which is 67 for most people, that benefit could increase to about $2,200 per month.
You might think, “Well, yes, it’s more money per month if I wait. But, I’ll be able to use that $1,500 monthly for those five years in between. I’ll get more benefits over time.”
This is where break-even analysis comes in. We need to calculate the age at which the total benefits received by claiming later would equal the total benefits received by claiming early. For most people, this break-even point falls somewhere in their mid-to-late 70s.
A Note of Caution
You may be thinking, “I’d rather have the money now. By my late 70s, I won’t care if I have more money.” But I caution against this mindset. If you’re approaching your 60s and in decent health, research shows you may live much longer than you expect.
If you are experiencing health issues or do not have a history of longevity in your family, it may make sense to consider claiming your Social Security benefits early.
When comparing when to claim your Social Security benefits, you need to consider:
- If you have health issues or there’s limited longevity in your family, claiming early might make sense
- If you’re in good health, delaying benefits could significantly increase your lifetime income
- The break-even point for social security 62 vs 67 vs 70 typically falls in your mid to late 70s
Based on my experience working with clients in their 70s, many feel they have 15-20 years of good health ahead of them. Once you reach your 60s, a significant percentage of people—perhaps one in three, one in four, or even 50%—will live into their 80s or 90s.
Social Security benefits become an increasingly important part of your income as you age. Especially since the benefits adjust for inflation. Inflation adjustment is what makes the break-even point so important. Don’t let any potential bias about the future of Social Security be your decision maker. What matters most is whether any other outside factors change your break-even point.
How Social Security Claiming Age Affects Spousal Benefits
The second major consideration is how Social Security claiming age impacts spousal benefits if you’re married.
Many households today have two incomes, meaning both spouses may have their own Social Security benefits. Coordinating when each of you claims can maximize your combined benefits and provide better long-term security.
If you and your spouse earn similar amounts, one strategy might be for one person to claim Social Security benefits early. The other can then delay claiming until 70 (the maximum age). This approach can help if you need the extra income to retire when you want, while still maximizing long-term benefits.
Why does this matter? The odds are high that, for a married couple, at least one spouse will live into their late 80s or early 90s. When one spouse passes away, Social Security provides the surviving spouse with whichever is the higher of the two benefits. You lose the other benefit completely.
This means if both spouses claim early, you’ve minimized both benefits, and eventually, one benefit will disappear entirely. By having one spouse delay claiming, you ensure the surviving spouse will have a higher guaranteed income for life.
Learning how to claim social security benefits strategically as a couple can make a significant difference in your lifetime income, especially for the surviving spouse.
Coordinating Your Disney Pension with Social Security Benefits
The third important factor is understanding the timing of income from all sources. Social Security is just one part of your overall income plan. For Disney professionals, other sources might include your Disney pension and personal savings.
Is it better to delay Social Security and live off your savings? Should you start taking Social Security early and delay drawing from your investments?
Some people say, “I don’t really need the money. I want to take it because I’m not sure if it will still be there. I’ll just save it.” However, Social Security benefits increase by roughly 7% for each year you delay taking them. That’s a substantial guaranteed return, even in today’s higher interest rate environment.
A 7% guaranteed return is difficult to match with investments, which come with risk. Your investments might earn more than 7%, but they could also lose 20-30% in a market downturn.
When planning your retirement, consider how Disney retirement benefits work in conjunction with your Social Security income. You might start living off your savings while delaying both Social Security and your pension. This allows these guaranteed income sources to grow and accumulate. Alternatively, if you’re not taking investment risk with your portfolio, your earnings are probably much less than the guaranteed rates of increase for your pension and Social Security.
Many Disney professionals wonder how to maximize both their Disney retirement benefits and Social Security. The key is to view them as complementary pieces of your retirement income puzzle rather than separate decisions.
Final Thoughts
These are just some considerations Disney professionals should think through when deciding when to take Social Security. The right strategy depends on your personal circumstances, including:
- Your health and family longevity
- Your marital status and your spouse’s benefits
- Your other income sources, including Disney pension
- Your immediate financial needs
- Your comfort with investment risk
When do you apply for social security benefits? The more important question is determining the optimal age to begin benefits based on your unique situation.
Understanding the differences between Social Security benefits at 62, 67, and 70 is crucial for maximizing your retirement benefits. While claiming at 62 provides income sooner, waiting until 67 or even 70 can significantly increase your monthly benefit amount, providing critical protection against longevity risk.
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