People are often advised not to rely too heavily on Social Security during retirement, and to save independently for that milestone instead. But let's be real. Saving for retirement isn't easy. It often means having to cut back on other expenses, and for lower earners, it can be an especially difficult task.
Furthermore, while some savers get access to free money in their retirement plans thanks to 401(k) matches, not everyone has a 401(k) to contribute to. And if you're limited to an IRA you have to fund yourself, you might struggle to build a lot of savings.
As such, you might end up quite dependent on Social Security, even if that's not your intent. And if that's the case, it's important to snag as high a monthly benefit as possible.
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The good news is that one simple move on your part could leave you with a lot more money on a monthly basis. And you don't need to spend weeks devising a cunning strategy to make that happen.
Choose your filing age wisely
The monthly Social Security benefit you're entitled to during retirement will hinge on your lifetime earnings -- specifically, your inflated-adjusted wages during your 35 highest-paid years in the workforce. But your filing age will determine your monthly benefit as well.
If you sign up for Social Security at full retirement age, or FRA, you'll get the exact monthly benefit your earnings history renders you eligible for. FRA kicks in at age 67 for anyone born in 1960 or later.
However, you're allowed to delay your filing past FRA. For each year you do, your benefit gets to grow 8%.
Once you turn 70, your benefit can no longer get boosted, so that's generally considered the latest age to sign up for Social Security. But if your FRA is 67 and you hold off on filing until age 70, you'll lock in a monthly benefit that's 24% higher -- for life.
Should you claim Social Security at age 70?
Filing for benefits at age 70 guarantees you a 24% boost compared to filing at age 67. But does that mean you should automatically wait that long? Not necessarily.
When it comes to claiming Social Security, there tends to be a lot of emphasis on growing your monthly benefit. But you should also think about your lifetime benefit.
If you have health issues and aren't confident you'll live a long life, then claiming Social Security at an earlier age than 70 could make more sense. In fact, in that scenario, it could actually pay to sign up at age 62, which is the earliest possible age to file. Claiming Social Security at 62 will result in a reduced benefit, but if your health-related outlook isn't particularly encouraging, then it may be a better bet.
However, if you're confident in your health and have no reason to believe you won't live a long life, then taking benefits at age 70 is a great way to score a higher payday for life. And that could make your retirement a lot more comfortable, especially if you're short in the savings department.
