Could Claiming Social Security Early Increase Your Lifetime Benefit?

More than 393,000 62-year-olds applied for Social Security in 2022, the most recent year data is available for. Many more are likely to join their ranks in the coming years, as 62 remains the most popular age to apply for checks. But only time will tell if they're making a good call.

Claiming Social Security early gives you more checks, but each one is smaller. This move costs most people thousands of dollars over their lifetimes. However, there are some who make out better by claiming early. The right move for you depends on two key factors.

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When is early claiming a good idea?

Early claiming is applying for Social Security benefits under your full retirement age (FRA). This varies by person, depending on your birth year. For most workers today, the FRA is 67, though some older workers may have an FRA as low as 66.

Applying for benefits under your FRA shrinks your checks by 5/12 of 1% to 5/9 of 1% per month. That could cost you 5% to 6.67% for a whole year of early claiming. But a lower monthly benefit doesn't always lead to a lower lifetime benefit.

It all depends on two key factors:

• Your financial situation
• Your life expectancy

Some people have to claim Social Security early because they're not able to work and lack personal savings to pay their bills. Their monthly benefit is a lifeline that helps them maintain their financial security. For these individuals, delaying Social Security is a poor choice, even if it could lead to larger checks or a larger lifetime benefit. It's not worth the financial strain it would cause in the present.

Having a job or personal savings to cover some of your retirement expenses gives you latitude to choose the claiming age that makes sense based on your life expectancy. Generally, those with short life expectancies -- people who don't expect to live past their mid-to-late 70s -- get more money overall from claiming earlier. But this isn't true for those with longer life expectancies.

Let's say you qualify for a $2,000 monthly benefit at your FRA of 67. You'd get 70%, or $1,400 per month, by claiming right away at 62. The following table shows your lifetime benefit for both claiming ages based on life expectancy. The figures represent how much you would have received in total by the end of that year (i.e. you'd have $16,800 if you claimed Social Security for the entire year you were 62):

Source: Author's calculations.

Based on this, we can see that if you expected to live no longer than 77, you'd get more money from Social Security overall by claiming at 62. But if you think you'll live longer, you'd get more money by delaying benefits until 67. And if we were to continue the table, we'd see the benefit gap between the two claiming ages grow exponentially wider.

When should you claim Social Security?

You can follow a similar process to what we did above to determine which claiming age makes the most sense to you. First, if you believe you'd be unable to afford your bills without Social Security, early claiming is likely your best bet. When that's not a factor, use estimates of your life expectancy and benefit checks to determine which claiming age will net you the most overall.

Life expectancy will be up to you to estimate based on your personal and family health history. You could try a life expectancy calculator or consult a doctor if you want a more objective opinion.

Then create a my Social Security account and check out the calculator there to estimate your future benefit at every claiming age. You may notice that it gives you estimates ranging from 62 to 70. That's because you can delay Social Security beyond your FRA to grow your checks further. Your benefits will increase by 2/3 of 1% per month, or 8% per year, beyond your FRA until you reach your maximum benefit at 70.

The calculator here gives estimates based on your income history to date. You can change this if you'd like by entering your estimated future income in the calculator. It will adjust its predictions accordingly.

Choose a few claiming ages you're interested in and multiply their monthly benefits by 12 to get your estimated annual benefits at each age. Then fill out a table like the one above and see which could pay you the most money overall based on your estimated life expectancy.

Whenever possible, choose the claiming age you believe will give you the largest lifetime benefit. But remember, you may have to repeat this process over the years if your health takes a turn or the government changes how it calculates Social Security benefits.