Social Security Strategy for DRS Members: Timing Your Way to Higher Benefits

​Meet Sarah, a 63-year-old King County Parks supervisor with 28 years of service earning $95,000 annually. She's eligible for her PERS 2 pension at 65 and can start Social Security as early as 62, but she's wondering about the best timing strategy.
For Washington State Department of Retirement Systems (DRS) members like Sarah, Social Security timing becomes especially complex because you have multiple income sources in retirement. Your decision affects not just monthly benefits but also how your pension, Social Security, and other savings work together. Making the right choice could mean thousands more in lifetime benefits.
Core Principles for Social Security Timing
Understanding these fundamental principles will guide your decision-making process:
1. Full Retirement Age Matters Most Your full retirement age (FRA) determines your baseline benefit. Sarah was born in 1962, so her FRA is 67, which means her full Social Security benefit is $2,200 per month¹.
2. Early Filing Reduces Benefits Permanently If Sarah starts Social Security at 62, her benefit drops to $1,540 monthly—a 30% reduction that lasts for life. This reduction continues even after she reaches age 67².
3. Delayed Credits Increase Benefits For every year Sarah delays past 67 until age 70, her benefit increases by 8%. At 70, she'd receive $2,728 monthly—24% more than her full benefit³.
4. Bridge Income Creates Flexibility Sarah's PERS 2 pension will provide approximately $3,350 monthly starting at 65. This bridge income gives her options to delay Social Security for higher lifetime benefits.
Your 5-Step Social Security Strategy
Step 1: Calculate Your Break-Even Age
Sarah's break-even analysis shows when delayed benefits overcome the income she gave up by waiting. Let's look at her numbers:

• Age 62 filing: $1,540/month = $18,480/year
• Age 67 filing: $2,200/month = $26,400/year
• Age 70 filing: $2,728/month = $32,736/year

If Sarah waits from 62 to 67, she gives up $92,400 over five years but gains $660 monthly forever. She breaks even at age 84. If she waits from 67 to 70, she gives up $79,200 but gains $528 monthly forever, breaking even at age 88⁵. (6% Investment Returns, 2.3% SS COLA)
Step 2: Assess Your Bridge Income Needs
Sarah's PERS 2 pension becomes available at 65 with no reduction. Her projected monthly pension is $3,350 based on her higher salary.
This creates a comfortable bridge:

• County pension: $3,350/month starting at 65
• Deferred Compensation: $1,500/month if she takes distributions from her $450,000 balance

With $4,850 in monthly bridge income, Sarah can afford to delay Social Security until 67 or even 70 without financial hardship.
Step 3: Evaluate Your Health and Longevity
Sarah is in good health with family longevity on her side. Her parents lived to 88 and 91 respectively.
Health factors supporting delayed filing:

• No chronic conditions
• Active lifestyle (hiking, cycling)
• Strong family longevity patterns
• Access to excellent state health benefits in retirement

Step 4: Analyze Tax Implications
Sarah's retirement income will include taxable pension benefits. Let's examine her tax situation under different scenarios:
Scenario 1 (File at 67):

• PERS pension: $3,350/month ($40,200/year)
• Social Security: $2,200/month ($26,400/year)
• Provisional income: $53,400 (85% of Social Security becomes taxable)

Scenario 2 (File at 70):

• PERS pension: $3,350/month ($40,200/year)
• Social Security: $2,728/month ($32,736/year)
• Provisional income: $56,568 (85% of Social Security becomes taxable)

While Sarah will pay more in federal taxes by waiting, Washington's lack of state income tax means she keeps more of the additional Social Security benefits than employees in other states.
Step 5: Consider Your Complete Financial Picture
Sarah has additional retirement assets that support delaying Social Security:

• 457 deferred compensation: $450,000
• Roth IRA: $65,000
• Emergency savings: $35,000

With these resources plus her pension, Sarah doesn't need Social Security income immediately. Maximizing the benefit makes sense for her situation.
Sarah's Three Options: A Detailed Analysis
Option A: File at Age 62 Sarah would receive $1,540 monthly starting immediately. Over a 25-year retirement (to age 87), she'd collect $462,000 total. This option provides immediate income but sacrifices significant lifetime benefits.
Best if: Sarah had immediate financial needs or serious health concerns.
Option B: File at Age 67 (Full Retirement Age) Sarah would receive $2,200 monthly starting at 67. Over a 20-year collection period (ages 67-87), she'd receive $528,000 total—$66,000 more than early filing.
Best if: Sarah wants to balance benefit maximization with years of collection.
Option C: File at Age 70 (Maximum Benefit) Sarah would receive $2,728 monthly starting at 70. Over a 17-year collection period (ages 70-87), she'd receive $557,688 total—the highest lifetime benefit despite fewer collection years.
Your Action Plan
Follow Sarah's approach to make your optimal Social Security decision:

1. Create your Social Security account at ssa.gov to review your earnings record and get accurate benefit projections
2. Meet with a DRS counselor to confirm your pension timeline and benefit amounts
3. Calculate your personal break-even scenarios using your actual benefit estimates and health factors
4. Assess your bridge income sources including pension timing, deferred compensation, and other savings
5. Model different tax scenarios to understand the federal tax impact of various filing strategies
6. Consider professional guidance from a fee-only financial advisor familiar with public employee benefits

Remember that Social Security timing is just one piece of your retirement puzzle. Like Sarah, your best decision depends on your complete financial situation, health outlook, and personal goals.
Sources and Resources

1. Social Security Administration - Full Retirement Age
2. Social Security Administration - Early Retirement
3. Social Security Administration - Delayed Retirement Credits
4. Washington State Department of Revenue - Income Tax
5. Washington State Department of Retirement Systems
6. Social Security Administration Benefit Calculators

 

-Seth Deal