There are arguments in favor of claiming Social Security right away at 62 and of delaying benefits for years so you can enjoy larger checks in the future. But if you choose the latter, you have to be careful. Delaying Social Security for too long can have some costly consequences.
Why does it matter when you sign up for Social Security?
A lot of people know that their income during their working years affects their Social Security benefit, but many don't realize that the age at which they claim benefits matters, too. The federal government assigns everyone a full retirement age (FRA) based on the year they're born. For most workers today, it's somewhere between 66 and 67. You must wait until this age to claim if you want the full Social Security benefit you've earned based on your work history.
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But a lot of people don't sign up then. Many choose to start as soon as they become eligible for Social Security at 62. This gives them more years of checks, but each check they claim under their FRA shrinks their monthly benefit. Signing up at 62 means you'll only get 70% of your full benefit per check if your FRA is 67, or 75% if your FRA is 66.
That's why some -- especially those who expect to live long -- choose to delay benefits. Every month they avoid claiming boosts their checks a little. But this stops at 70. That's when you qualify for your maximum monthly benefit of 124% of your full benefit per check if your FRA is 67 or 132% if your FRA is 66.
You should never delay Social Security past 70 because you won't get any extra cash for doing so. You're just missing out on months of checks you could be using to help pay your bills.
When should you apply for Social Security?
It's up to each person to decide when they want to sign up for benefits. Claiming earlier generally makes more sense for those with serious health issues and those who cannot afford to pay their bills without help from Social Security. But if you expect to live until your 80s or beyond, delaying may get you more money over your lifetime.
You can sign up for Social Security up to four months before you intend to claim. If you were born on the first or second of a month, you become eligible in the month of your 62nd birthday. Otherwise, you can't start claiming until the month after.
If your goal is to wait until 70, it's not a bad idea to sign up a month or two in advance and request that your benefits begin at 70. That way, you don't have to worry about forgetting to sign up on time. But you don't have to do this if you don't want to.
What if you've already waited too long?
If you're already over 70 and haven't begun claiming Social Security yet, don't panic. It's possible to claim up to six months of benefits retroactively. So, for example, if you're 70 1/2, you can apply right away and still get the six months of benefits you've missed out on so far. If you're more than six months past your 70th birthday, you won't get all of your missed Social Security checks, but you can get some.
It's worth noting that if you claim the full six months of retroactive benefits, this can shrink your checks if you're less than six months past your 70th birthday. For example, if you're 70 and three months and you choose to claim six months of retroactive benefits, the government will pay you the monthly amount you were entitled to at 69 and 9 months, not the amount you'd get at 70. In this case, you'd want to claim just three months of retroactive benefits to get your largest monthly checks.
No matter what age you are, now's a great time to revisit your Social Security claiming strategy or create one if you haven't already. Think about the age you want to claim benefits and when you plan to apply. If you want to start claiming immediately, start gathering your documents, like your birth certificate and recent tax forms, to speed up the application process.
