One of the neatest things about Social Security is that you get choices for signing up. You're entitled to your full monthly benefit based on your wage history at full retirement age, or FRA. That age is 66, 67, or somewhere in between, depending on your year of birth.
You can also sign up for benefits as early as age 62, or as late as age 70. In fact, technically, you can file for Social Security beyond age 70, but since claiming benefits past age 70 won't do anything for you, 70 is generally considered the latest age to sign up.
The upside of delaying your filing beyond FRA is boosting your benefits permanently in the process. But the downside is having to wait to get that money.
Image source: Getty Images.
Most seniors don't want to wait, which is why, traditionally, only a small percentage end up delaying their filings. A more popular filing choice is to sign up for Social Security at age 62. Doing so means shrinking your benefits, but also getting to collect that money a lot sooner.
You may be inclined to file for Social Security at 62 to avoid having to wait on the benefits you've worked hard for. But before you go that route, you'll need to make sure it's a decision you can afford.
Your retirement costs may be higher than expected
A lot of seniors today are struggling financially in the wake of rampant inflation. Right now, everything from gas to groceries to utilities is costing more, and seniors who live mostly on Social Security are no doubt struggling.
Now it's easy to argue that today's circumstances are somewhat extreme, economically speaking. But inflation is by no means a new thing. It's natural for your buying power to erode over time, and so even if you enter retirement with a decent chunk of savings, your money may only go so far.
That's why you may want to reconsider claiming Social Security at age 62 and shrinking your benefits a lot in the process. If inflation explodes during your senior years, a higher monthly benefit could spell the difference between staying afloat and sinking.
Also, the savings you bring with you into retirement aren't guaranteed to last throughout your senior years. If you end up living longer than expected, which would technically be a good thing, you could end up depleting your nest egg even if you manage your withdrawals carefully.
Meanwhile, the monthly benefit you receive from Social Security is payable to you for life. And so the higher that benefit is, the more long-term financial security you might buy yourself.
A compromise may be in order
You may not like the idea of claiming Social Security at age 70, or even having to wait until FRA to start collecting benefits. But if that's the case, the solution isn't necessarily to rush to file at age 62. Rather, you can compromise by signing up at age 65, for example. In doing so, you'll cut your benefits, but not to the same degree as you would by filing as early as possible.
