Many seniors have a time hard figuring out when to claim Social Security because there are pros and cons to different options. Filing for benefits at age 62, for example, means getting your money sooner. But it also means slashing your monthly benefit for life.
Waiting until full retirement age (FRA) means not having to face a reduction in benefits. But it also means waiting longer to get your hands on your money. And while filing for Social Security at age 70 means snagging the highest possible monthly benefit you can get based on your wage history, it could mean having to delay retirement.
Now when you sit down to think about the right age to claim Social Security, you may be focused on what your monthly benefit will look like in each scenario. And that's an important thing.
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But that's not the only calculation you should run. It pays to think about how long you expect to live, because that could, and should, play a role in your decision.
Don't just fixate on monthly income
The sooner you claim Social Security, the less monthly income you'll have to look forward to. But rather than focus on monthly income, you should also think about lifetime income -- the total amount Social Security pays you in the course of your senior years.
If you end up living a very long life, then you may find that on a lifetime basis, you come out ahead the most financially by delaying Social Security as long as possible. On the other hand, if you don't end up living very long, filing early might be your best bet.
Of course, you can't definitively predict how long you'll live because, well, no one has that ability. But you can make an educated guess based on your health and your family history.
If you're in your early 60s and are in great shape with no known issues, and your parents are still alive in their 90s, then there's reason to believe you might live a longer life. On the other hand, if your health is already failing at age 62 and your parents and grandparents all passed away in their early 70s, then you may want to anticipate a shorter lifespan and use that to guide your Social Security filing decision.
Here's just one example of how life expectancy calculations might work. Let's say you think you'll live until age 85. If you're entitled to a monthly Social Security benefit of $1,700 at an FRA of 67 and you sign up then, your total lifetime payout will be $367,200. If you file at age 62, your total payout will be $328,440. And if you file at age 70, your total payout will be $379,440. So in this case, delaying your claim until 70 actually makes the most sense.
These numbers look different if you assume you'll only live until 75. In that case, filing at FRA will leave you with a lifetime payout of $163,200. Filing at 62 will leave you with $185,640, and filing at age 70 will give you a lifetime total of $126,480. So in this case, filing at age 62 is your best bet.
An important factor to consider
Determining your own longevity isn't easy. But it's important to do so before you claim Social Security. That way, you'll be in a better position to snag the most lifetime income -- even if that means collecting less money on a monthly basis.
