When it comes to choosing when to begin claiming Social Security benefits, you have a few options. The earliest you can file is age 62, but you could also wait to claim at any age thereafter. If you wait until age 70 or beyond to begin claiming, you'll receive the highest possible amount each month.
If you're eager to get a jump-start on retirement, claiming as early as possible might seem like the best option. However, not only will you receive smaller checks each month by claiming early, but you could also receive tens of thousands of dollars less in total compared to if you'd delayed benefits.
Just how much could claiming early cost you?
To see just how much you could miss out on by taking Social Security at age 62, let's look at a hypothetical example.
The average benefit amount is $1,514 per month, according to the Social Security Administration. Let's say you have a full retirement age of 67 years old, and if you were to claim at that age, you'd receive $1,514 per month. By claiming at 62, your benefits will be reduced by 30%, giving you a monthly total of $1,060. If you were to delay claiming benefits until 70, you'd earn a 24% bonus on top of your full benefit amount, which comes out to $1,877 per month.
The average 62-year-old can expect to live to around age 84, according to the Centers for Disease Control and Prevention. By claiming at age 62, you'd have received a grand total of $279,840 in benefits by age 84. But if you wait until age 70 to claim, you'd collect a whopping $315,336 in total -- or approximately $35,500 more than if you'd claimed early.
The advantages of claiming early
Although delaying benefits could result in collecting more money over a lifetime, money isn't everything. And there are a few reasons why claiming sooner rather than later may actually be a smart move.
When you claim earlier, you have more time to enjoy your retirement. Waiting until age 70 to begin collecting benefits doesn't give you as much time to enjoy that money, and because time is your most valuable asset, the last thing you want is to reach the end of your life with regrets.
Even if you're in the best shape of your life and expect to live a long lifespan, delaying benefits can still be risky. You never know if health issues will unexpectedly arise, and waiting until age 70 to claim essentially involves betting on your health. That bet could pay off if you live a very long lifespan, or it could cost you precious time that you can't get back.
Finally, claiming early can be a safer choice than delaying. You're allowed to continue working even after you claim benefits, so if you claim early but then decide you want to go back to work, you can do that. But if you delay benefits and then regret your decision, you can't go back in time and claim earlier.
Choose wisely when claiming Social Security
Your benefits will likely have a significant impact on your retirement, so it's important to decide carefully when choosing what age to begin claiming. While delaying benefits may not be the right choice for everyone, in some cases it's the best retirement decision you can make.