Deciding when to claim Social Security is one of your most important choices later in life. The size of your retirement benefit is affected by the age when you first get your checks, and you have multiple options.
While there are pros and cons to each claiming choice, there are three key questions that can help you decide what your best bet is. If you answer yes to any of them, waiting until 70 is most likely the right option.
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1. Are you afraid of running out of money late in retirement?
Social Security benefits provide guaranteed lifetime income. If you're concerned you could run short of funds late in life, you'll want that income to be as large as possible. So you should do your best to maximize your checks, which means waiting until 70 to claim them.
You can file for Social Security earlier, but claiming benefits before your full retirement age (FRA) results in smaller checks; starting benefits after your FRA earns you delayed retirement credits and bigger checks.
You can't earn any more of these credits after 70. But after you hit your FRA (between 66 and 67), they can raise your benefits by 2/3 of 1% for each month you wait (8% annually) up to 70. If you worry about running short late in life, try to get the most delayed retirement credits you can so your checks are as large as they can be.
2. Do you think you'll outlive your projected life span?
The Social Security Administration (SSA) benefit formula provides delayed retirement credits for those who wait, and penalizes those who claim early, with the goal of equalizing the amount of benefits that people receive even if they claim at different ages. Based on actuarial data about life expectancies, the SSA aims to ensure you get the same lifetime income regardless of whether it comes from receiving more (but smaller) checks because you claimed earlier, or fewer (and larger) ones because you delayed.
You can beat the system by claiming your benefits late if you outlive your life expectancy. If you live longer than Social Security's actuaries predict, you'll not only receive enough larger checks late in life to make up for the benefits you missed by waiting, you'll also keep getting those checks after that point. So every extra dollar you get due to delaying your benefits claim is one you wouldn't have had if you didn't wait.
3. Do you have a spouse who earned less than you?
Survivors benefits from Social Security allow the surviving spouse to get the higher of the two Social Security checks received by each person in the marriage. If you shrink your Social Security benefit by claiming early and you were the higher earner, you'll reduce the survivors benefits your spouse gets if you die first.
This could make life financially difficult for your widow(er), especially since the death of a spouse is a major financial shock. If you want to make certain your spouse has the maximum Social Security benefit, claiming at 70 is likely the best choice.
