One of the most important retirement decisions you'll make is choosing when to begin claiming Social Security benefits. The age you file for benefits will affect your monthly checks for the rest of your life, so it's not a decision to be made lightly.
You can begin claiming benefits at age 62, but the longer you wait -- up to age 70 -- the more you'll receive each month. For that reason, many people think waiting until age 70 is the wisest move, because it results in bigger checks each month.
However, delaying benefits isn't the right move for everyone, and there's one good reason not to wait too long to begin claiming.
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Consider the life expectancy factor
When deciding when to claim benefits, many people only think about how much they'd receive each month by claiming at a certain age. But there's one other important factor to consider: life expectancy.
Theoretically, you should receive roughly the same amount in lifetime benefits regardless of whether you claim early or delay benefits. You'll receive less money each month if you claim early, but you'll receive more checks over a lifetime than if you'd delayed benefits. So, on paper, everything should even out in the end.
That said, sometimes the math doesn't always work out the way it's supposed to. That means you could actually receive more money over a lifetime if you claim earlier or later.
Why claiming early could work out in your favor
The average life expectancy in the U.S. is 78.6 years old, according to the Centers for Disease Control and Prevention. If you were to wait until age 70 to claim, you'd only have a few years to enjoy your benefits. But if you'd claimed earlier, even though you'd be receiving smaller checks, you might still receive more money over a lifetime.
Say, for example, you have a full retirement age of 67 years old, and you'd collect $1,500 per month in benefits by claiming at that age. If you claim at age 62, your checks will be reduced by 30%, leaving you with $1,050 per month. Wait until age 70 to claim, however, and you'll receive a 24% boost, or $1,860 per month. Here's how much you'd receive in benefits over a lifetime:
| Age | Lifetime Benefits When Claiming at Age 62 | Lifetime Benefits When Claiming at Age 67 | Lifetime Benefits When Claiming at Age 70 |
|---|---|---|---|
| 67 | $63,000 | $0 | $0 |
| 70 | $100,800 | $54,000 | $0 |
| 75 | $163,800 | $144,000 | $111,600 |
| 78 | $201,600 | $198,000 | $178,560 |
| 80 | $226,800 | $234,000 | $223,200 |
| 85 | $289,800 | $324,000 | $334,800 |
Source: Author's calculations
In this case, the only scenario where waiting until age 70 to claim benefits makes sense is if you live until age 85 or beyond. If you live to age 78, the average lifespan for Americans, you'd come out slightly ahead by claiming benefits at age 62. And if you were to live to age 80, claiming benefits at age 67 would be your best bet.
Estimating your life expectancy
Of course, the fact that nobody can predict exactly how long they'll live can complicate your decision of when to claim. But by estimating your lifespan the best you can, it will be easier to decide what age you should file for benefits.
Be honest with yourself about your health, and consider how long you can realistically expect to live in retirement. If you're battling health issues, think about how likely it is that you'll live into your mid-80s or beyond. In addition, look at your family history to see if there are any trends. If most of your relatives have lived into their 90s and you're in fantastic physical health, there's a good chance you will live a long and healthy life.
You don't need to be exact here, either. Whether you live to age 80 or 82, for instance, probably won't make a significant difference in how much you receive in benefits over a lifetime. But if you under- or overestimate your life expectancy by a decade (or more), that will have an enormous impact on your lifetime benefits. In other words, aim to get in the right ballpark when estimating your lifespan, but don't get too hung up on trying to predict exactly how long you'll live.
Millions of retirees depend on Social Security benefits to make ends meet during their senior years, so it's vital to ensure you're maximizing your monthly checks. By choosing the right age to begin claiming, you can make the most of your money in retirement.
