Few decisions are more important than when you decide to start collecting Social Security. You'll be eligible to receive monthly payments for the rest of your life once you claim, but the size of those payments depends greatly on how soon you pull the trigger. With a choice of anywhere from age 62 to age 70, figuring out the best answer can be extremely difficult.
My Motley Fool colleague Maurie Backman has spent a lot of time analyzing Social Security decisions, and she makes a strong case here for delaying as long as you can possibly can before claiming Social Security. But there are some equally good reasons why deciding to focus on full retirement age, which ranges from 66 for those born between 1943 and 1954 up to 67 for those born in 1960 or later, as your starting point for Social Security can be a great idea.
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1. You'll get more payments sooner
The most obvious benefit of not delaying past full retirement age is that you'll get more monthly checks sooner than if you wait until 70. Those payments will be smaller, but you'll receive 36 to 48 more of them depending on when your full retirement age happens to be.
Those early payments will give you a head-start over those who wait, and later-claimers will take years before they've caught up. Those who want money early in retirement appreciate the extra cash in their 60s when it's of greater value to them in pursuing an active retirement lifestyle before any potential health issues arise. Those who don't need the additional benefits can invest what they get from Social Security and push their break-even date back even further. Either way, choosing not to delay beyond full retirement age works as a good compromise between claiming at the earliest possible age of 62 and waiting until the last possible moment at 70 to file for benefits.
2. You don't want to leave your family in the lurch
Delaying Social Security doesn't just have an impact on you. If there are other family members, such as a spouse or children, who rely on your work record for their benefits, then the decision you make about your retirement benefits affects them as well.
Changes to Social Security law a few years ago made it a requirement for those claiming spousal or children's benefits that the person on whose work history they were claiming must have filed for their own retirement benefits. Otherwise, the family benefits remain unavailable.
That's especially important for single-earner families. Although you can find vastly different family situations that require individualized advice, it's not uncommon to see single-earner families where the working spouse is slightly older than the non-working spouse. In those situations, having the working spouse claim at full retirement age often works out well from a timing perspective for the non-working spouse to get some early benefits as soon as possible.
3. You're still working but want some supplemental income
Many people who work in the 60s would prefer to get some extra cash from claiming their Social Security benefits. However, for those who are still employed, the Social Security Administration has a nasty provision that can sometimes result in your having to forfeit Social Security benefits. For those who claim Social Security even before full retirement age, earnings of $17,040 or more can force you to have to give up at least a portion of your monthly benefits.
However, you don't have to wait until age 70 to avoid forfeiting your Social Security. The rules governing the program allow you to make as much as you want after you reach full retirement age. Therefore, if the only reason you're waiting to claim is to avoid forfeiture, there's no need to delay beyond full retirement age.
Find out what's right for you with Social Security
There's no single solution to figuring out when you claim Social Security that works for everyone. Only by taking your own particular needs and wants into account will you make the choice that will work the best for you.
