Choosing when to begin claiming Social Security benefits is one of the most important retirement decisions you'll make, because the age you file for benefits will affect how much you receive each month for the rest of your life.
Some people may advise waiting until age 70 to start collecting benefits, because you'll receive significantly larger checks each month compared to if you'd claimed earlier. However, for many retirees, claiming as early as possible at age 62 is actually one of the best retirement decisions you can make.
Sometimes it pays to claim early
Social Security benefits are designed so that, in theory, you'll receive roughly the same amount over a lifetime no matter when you begin claiming. If you claim early, you'll receive smaller checks but more of them. Claim later, and you'll receive fewer -- but bigger -- checks.
That said, you have to live to a certain age to "break even" -- or collect as much by delaying benefits as you would if you'd claimed earlier. For most people, the break-even age is around age 80 to 85, meaning you have to live to at least that age in order to receive as much or more over a lifetime by delaying benefits.
The problem, however, is that the average American can expect to live a lifespan of around 78.6 years, according to the Centers for Disease Control and Prevention. This means that many Americans won't reach their break-even age, and they might actually collect more money over a lifetime by claiming benefits sooner rather than later.
Of course, it can be tough to predict how long you'll live, but take an honest look at your health and family history. If you're battling health issues or if certain diseases or illnesses run in your family, it's important to think about how that could affect your life expectancy. And if you have reason to believe you may live an average or shorter-than-average lifespan, claiming early can give you more time to enjoy your benefits.
When it's worthwhile to wait
Although claiming benefits early may be the right decision for millions of retirees, it won't be the best choice for everyone.
If you expect to live a much longer-than-average lifespan, for example, you could collect more money over a lifetime by delaying Social Security. Again, it can be difficult to estimate your life expectancy, but coming up with a rough estimate of how long you might live can help you determine whether it's better to claim early or hold off on filing for benefits.
Another reason to consider delaying benefits is if you don't have much saved and are able to continue working. By waiting a few years to retire and claim Social Security, you'll have more time to save and can take advantage of those larger checks.
Which option is right for you?
Choosing when to begin claiming benefits is a highly personal decision, so there's no one-size-fits-all answer as to what is the best age to file.
If you have reason to believe you likely won't live until your 80s or beyond, claiming early might result in collecting more money over a lifetime. But if you expect to live a long and healthy life or don't have much saved, the extra benefits you'd receive by waiting could make for a much more comfortable retirement.
No matter when you choose to file for Social Security, make sure you have a strategy behind your decision. By thinking carefully about when is the best time to claim based on your unique situation, you can make the most of your benefits.