The decision about when to claim Social Security is one of the most consequential choices in retirement planning, and it is permanent. If you claim it too early, you lock in a reduced benefit for life, but if you wait longer and increase your monthly check, you’ve also spent years without it. For Montana retirees, there is an added layer to consider: Montana is one of a shrinking number of states that still taxes Social Security benefits at the state level, which changes how the math plays out depending on when and how you claim.
Here is what the 2026 rules look like and how to think through the decision for your situation.
The central question with Social Security timing is simple: at what age does waiting pay off more than claiming early? The answer depends on how long you live.
For someone comparing claiming at 62 versus waiting until 67, the break-even age is roughly 78 to 79. That means if you live past 79, waiting until 67 produces more total lifetime income. For someone comparing 67 versus 70, the break-even is around 82 to 83. If you live past that point, delaying to 70 wins.
Montana retirees tend to be active, outdoor people — many are hunting, fishing, camping, and spending summers on the lake well into their 70s and beyond. Longevity is a real factor for this population, and a claiming decision made at 62 has a long time to play out.
When Claiming Early Can Make Sense
Waiting is not always the right answer. There are situations when claiming at 62 or earlier than 67 is a reasonable decision.
If you have a serious health condition that affects your life expectancy, claiming early may produce more total lifetime income than waiting. If you need the income to cover essential expenses and have no other options, claiming is better than going into debt or depleting savings at a rate that is hard to recover from. If you plan to keep working and are under full retirement age, the earnings test applies: in 2026, $1 in benefits is withheld for every $2 you earn above $24,480. That withheld money comes back as a higher benefit once you reach full retirement age, but it affects your cash flow in the meantime and can make early claiming feel pointless if you are still earning a meaningful salary.
The Case for Waiting Until 70
For retirees in good health with other income sources to draw on — retirement accounts, a pension, a spouse's income — delaying to 70 is often the strongest financial move available. Social Security is one of the only retirement income sources that is guaranteed for life, adjusted for inflation each year, and cannot be outlived. Buying more of that income by waiting is generally a better trade than withdrawing from an investment portfolio to cover the gap.
One way to think about it: spending from savings between retirement and age 70 converts a portion of your portfolio into a guaranteed, inflation-adjusted income stream.
Spouses should also think about this together. When the higher-earning spouse delays to 70, the survivor benefit — which the surviving spouse will receive for the rest of their life — is also larger. For married couples, the Social Security decision is often as much about protecting the surviving spouse as it is about maximizing the first claimant's check.
Montana Taxes
Montana is one of a small number of states that still taxes Social Security benefits at the state level. Montana follows the federal formula, meaning that whatever portion of your Social Security is taxable federally is also taxable in Montana. At the federal level, up to 85% of your benefits can be included in taxable income once your combined income (AGI plus nontaxable interest plus 50% of your Social Security benefit) exceeds $34,000 for single filers or $44,000 for married couples filing jointly.
The timing of when you claim Social Security affects not just your federal tax picture but your state tax bill as well, and coordinating your claiming decision with your overall withdrawal strategy can make a meaningful difference in what you actually keep.
Montana does provide a subtraction from federal taxable income for residents age 65 and older (verify the current amount with the Montana Department of Revenue or a tax professional, as it is indexed annually), but it does not exempt Social Security from state tax the way most other states now do.
How the Decision Connects to Your Overall Plan
Social Security timing is not isolated from the rest of your financial plan. It interacts with your retirement account withdrawals, your tax bracket, your Medicare premiums, and your RMDs. A few things to consider:
Delaying Social Security often means drawing more from retirement accounts in the early years of retirement. Those withdrawals increase your taxable income, which can affect Medicare IRMAA surcharges (based on income from two years prior) and push you into a higher bracket. In some cases, doing Roth conversions in the years between retirement and age 70, when income may be temporarily lower, can reduce the long-term tax hit on both Social Security and RMDs.
For business owners and self-employed people, Social Security benefits are based on your earnings history — specifically, the Social Security Administration uses your highest 35 years of inflation-adjusted earnings. If you had lower-income years early in your career or years when you paid yourself less to grow your business, that affects your benefit calculation. Knowing your projected benefit at different claiming ages, which you can check at ssa.gov, is the starting point for any claiming strategy.
The Most Common Mistake
The most common Social Security mistake we see is making the claiming decision without considering the full picture: looking only at the monthly benefit number without factoring in life expectancy, other income sources, spousal benefits, taxes, or how the claiming age interacts with the rest of the retirement plan. The second most common mistake is letting emotion drive the decision: claiming at 62 because it is available and feels like getting something back after decades of contributions, without evaluating whether waiting would produce significantly better long-term outcomes.
If you are within five years of claiming, have a conversation with a financial advisor who can model the scenarios specific to your situation.
If you have questions about when to claim Social Security and how the decision fits into your retirement plan, give our team a call at (406) 657-9621.
Frequently Asked Questions
What is the full retirement age for Social Security in 2026?
Full retirement age is 67 for anyone born in 1960 or later. For those born in 1959, it is 66 years and 10 months. This is the age at which you receive your full benefit with no reduction. Claiming before full retirement age permanently reduces your benefit, and delaying past full retirement age increases it by 8% per year up to age 70.
Does Montana tax Social Security benefits?
Yes. Montana is one of roughly eight states that still taxes Social Security benefits in 2026. Montana follows the federal formula, so whatever portion of your Social Security is included in your federal taxable income is also taxable in Montana at state rates. Montana's top income tax rate is 5.9%, which applies to most retirees with meaningful retirement income. This is an important consideration when planning your claiming strategy and coordinating Social Security with other retirement income sources.
What happens to my Social Security benefit if I keep working after claiming at 62?
If you claim before full retirement age and continue working, the earnings test applies. In 2026, $1 in benefits is withheld for every $2 you earn above $24,480. The withheld amount is not lost permanently — once you reach full retirement age, the SSA recalculates your benefit upward to account for the months benefits were withheld. However, the cash flow reduction in the meantime catches a lot of people off guard, and in many cases it makes early claiming less useful if you plan to keep earning meaningful income.
This information is not intended as specific tax or legal advice. Please consult a qualified tax or legal professional regarding your individual situation.