One of the most pressing questions plaguing soon-to-be retirees is when to start claiming Social Security benefits. In fact, nearly half of U.S. adults age 45 and older say deciding when to file for benefits is their biggest question about retirement, according to a survey from Empower Institute.
Choosing when to claim is a huge decision, because it will affect how much you receive each month for the rest of your life. If you claim at your full retirement age (FRA) -- which is age 67 for those born in 1960 or later, or either 66 or 66 and a few months for those born before 1960 -- you'll receive the full benefit amount you're theoretically entitled to. You can claim earlier than that, but your benefits will be reduced by up to 30% if you have a FRA of 67 and claim as early as possible at age 62.
Although you'll receive smaller checks by claiming earlier than your FRA, in some scenarios it might be your best choice. There are three reasons why claiming early might be in your best interest.
1. You might receive more money over a lifetime
In theory, the total amount you receive in benefits over a lifetime should be roughly equal if you live an average life expectancy, which is approximately 85 years, according to the Social Security Administration. You'll either receive smaller checks but more of them, or you'll get fewer, bigger checks.
However, if you have reason to believe you'll live a shorter-than-average lifespan, claiming early might mean you'll receive more money over your lifetime than if you were to hold off on filing for benefits.
Of course, nobody can predict exactly how long they'll live in retirement. But if you're battling health issues or have a family history of certain diseases or illnesses, it might be worth considering claiming sooner rather than later. If you delay benefits and then realize you don't have as much time as you thought to enjoy that money, you could regret not claiming earlier.
2. You can start enjoying retirement sooner
If you have a solid retirement fund, you may not need the extra cash you'd receive each month by delaying benefits. In that case, you might want to claim benefits early and get a jump start on your retirement.
Keep in mind that you don't necessarily need to retire and claim benefits at the same time. So if you wanted to retire in your early 60s and then wait a few years to file for benefits so you can earn those bigger checks, you can do that. But if you have big plans for retirement, claiming early can provide you with a little extra cash sooner so you can better enjoy those early years when you're still relatively young and healthy.
3. You can create a claiming strategy with your spouse
If you and your spouse are both eligible to collect Social Security benefits, it's wise to have a strategy in place for how each of your monthly checks will affect your retirement.
For example, if your spouse earns significantly more than you and is entitled to more money in benefits, it may be smart for you to claim early and for your spouse to delay benefits. That way you two can enjoy some extra cash now with your benefits, but you'll also be able to rely on bigger checks down the road if your spouse waits to claim.
Claiming benefits early isn't the right decision for everyone, but for some people it can make retirement much more enjoyable. If you've done your homework and considered all your options, claiming early may be one of the best retirement decisions you'll ever make.