If you're approaching retirement age, you may be grappling with a big decision: Should you take a reduced Social Security benefit as early as age 62, wait until full retirement age, or hold out for the maximum benefit at age 70? Waiting until you're 70 will give you a monthly check that's 77% higher than starting at 62.
The decision can feel like a morbid calculus. If you can figure out your odds of dying relatively young versus living into your 90s, you can maximize your lifetime benefits. But focusing on the lifetime benefit ignores the reality so many seniors face: Older Americans often can't afford to worry about how much Social Security they'll collect over their lifetimes because they need those checks to survive right now.
The glaringly obvious reason to take Social Security before age 70
The No. 1 reason to take Social Security before you're 70: You need money long before you're 70.
In a perfect world, timing your Social Security benefits wouldn't be such a critical decision. Everyone would have ample retirement savings, and those monthly checks would only make your golden years sweeter. But the reality is that about half of adults in the U.S. over age 65 rely on Social Security for at least 50% of their income. According to the Center on Budget and Policy Priorities, nearly 40% of seniors would have incomes below the poverty level without Social Security.
Even when you have retirement savings, things don't always go as planned. Seniors are often forced to retire early for a number of reasons: Medical issues can make finding work difficult, and even healthy seniors may need to stop working to care for an ailing spouse. Older Americans are especially vulnerable to layoffs and frequently face age discrimination when they search for new work.
Waiting as long as possible to collect Social Security benefits may make sense in a number of circumstances. But if you're struggling to pay for housing, healthcare, utilities, or groceries, taking Social Security long before age 70 is a no-brainer.
What if you don't need the money?
Even if you have money to cover your basic expenses, starting benefits before you're 70 can be a good move. For example, you don't want to draw down investments in a bear market unless you have no other option. Social Security can help you bridge the gap until your investments have time to recover.
Sometimes, wanting the money sooner rather than later is as good of a reason as any. Maybe taking benefits in your 60s allows you to travel and spend more time with family -- things you may not want to put off until your 70s.
When is the right age for collecting Social Security?
Holding out for the biggest possible Social Security benefit is a luxury many Americans don't have. If you don't need the money right away, it does make sense to consider your lifetime benefits. Typically, you'll want to hold out longer if you're in good health, especially if you're worried about outliving your money. Starting benefits sooner is often a good move when you have major health concerns.
If you're younger, it's essential to put aside as much as you can for retirement savings. Many people don't have a choice about when they start taking Social Security benefits because they need the money as soon as possible. But the bigger your nest egg, the more flexibility you'll have when it comes to whether you take Social Security sooner or later.