When should you claim Social Security?
This is one of the most difficult questions to answer as you think about retirement. You can start benefits as early as 62 or wait as long as 70. And there’s advantages and disadvantages associated both with claiming ASAP or waiting as long as possible.
To help you decide which age is best for you, three Motley Fool retirement experts weigh in on the best reasons to claim Social Security at three popular ages: 62, 67, and 70.
Age 62
Maurie Backman: Age 62 is the earliest age you can file for Social Security, and if you go this route, you’ll reduce your benefits substantially by signing up to receive them well ahead of full retirement age. But in spite of that reduction, 62 is still a great age to claim benefits.
For one thing, filing for Social Security at 62 could be your ticket to early retirement. Many people work hard all their lives and save diligently for the future. If you’re one of them, and you can afford your senior living costs based on the money you’ve socked away in your 401(k) or IRA alone, then claiming benefits at 62 could help you leave the workforce sooner. And from there, you may be more likely to get to fulfill your retirement goals.
Let’s face it — the older we get, the more health issues or mobility we’re apt to encounter. As such, it’s fair to assume that you’ll have more energy to travel, enjoy nightlife, or pursue hobbies at 62 than at a later age. Claiming benefits as early as possible is therefore an opportunity worth taking if you’ve saved enough to be able to afford a hit to your monthly payments.
Another thing you should know is that if you have doubts about your health, filing for Social Security early could leave you with more money in your lifetime. While it’s true that claiming benefits at 62 will leave you with less money on a monthly basis, if you pass away at a relatively young age, you could wind up getting a higher payout on a lifetime basis.
Of course, if you haven’t saved a lot for retirement and have no reason to think you won’t live a long life, then you may want to choose a later age to file for benefits. But if you’ve earned the right to kick-start your retirement sooner or have questions about your long-term health, then 62 may be the perfect age for you to start collecting the Social Security benefits you’re entitled to.
Age 67
Katie Brockman: Claiming benefits at age 67 is a good middle-ground option if you’re unsure about whether to claim Social Security early or delay benefits.
Age 67 is the full retirement age (FRA) for anyone born in 1960 or later. By claiming at your FRA, you’ll receive the full benefit amount you’re entitled to collect. In other words, while you won’t receive the bonus amount you’d earn by delaying benefits, your monthly payments also won’t be reduced.
To see how much you’re entitled to collect in benefits, you can check your statements online with a mySocialSecurity account. Your statements will include an estimate of your benefit amount based on your real earnings throughout your career. Keep in mind that this number assumes you’ll be claiming at your FRA, so if you claim before or after that age, you’ll need to account for adjustments in your benefit amount.
Claiming benefits at age 67 can be a smart move for someone who wants to earn more from Social Security but doesn’t want to work too long. Although you don’t necessarily need to claim benefits and retire at the same time, many people do continue working until they’re ready to claim Social Security.
Waiting until age 70 to retire and file for benefits may not be feasible for many workers, especially if you’re battling health issues or want to get a jump-start on retirement. However, claiming at 62 means you’ll receive significantly smaller checks each month, which can be problematic if money is tight in retirement. Age 67 is a smart compromise for many retirees, because your benefits won’t be reduced but you can still retire relatively early.
Age 70
Christy Bieber: Not everyone can wait until 70 to claim Social Security benefits. But if you’re able to make this plan work, waiting until 70 is often the best choice. That’s true both because you’ll have more money every month when you’ll eventually claim benefits and because you’ll maximize the chances of getting the most possible lifetime benefits.
See, you can earn delayed retirement credits for each month you wait to start benefits after full retirement age, but you can’t earn any more credits after age 70, so there’s no benefit of delaying beyond then.
These delayed retirement credits raise the amount of your Social Security income by 8% annually for each full year you wait, so can result in hundreds or even thousands of dollars more in annual income. This extra money could really come in handy later in life if your savings starts to run short.
And while you do need to collect your higher benefits for a while before you make up for money missed by delaying, many people break even and live long enough to end up better off. In fact, research has shown that claiming benefits at 70 is the financially optimum choice for close to 60% of retirees.
Of course, claiming at either 62 or 67 could end up being the better option if you die before you make up for forgone benefits — although you could also end up reducing spousal benefits left to your surviving widow(er) by claiming early. But unless you have reason to suspect you won’t live as long as your life expectancy, odds are good that delaying until 70 will end up being the best decision for you.
