When it comes to deciding when to claim Social Security benefits, you have several options. You can file at age 62 to start receiving checks as soon as possible, or you can wait a few months or years to earn larger monthly payments.
Retirees are often advised to wait until age 70 to start claiming Social Security, because that will result in the largest possible payments each month. However, there are a few reasons why holding off on claiming could be a risky move.
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1. You might not have as much time to enjoy retirement
If you wait too long to file for Social Security, there's a chance you could regret your decision.
Delaying Social Security benefits means betting on your health. If you're going to wait until age 70 to start receiving monthly checks, you have to hope that you'll remain healthy long after that age to give yourself plenty of time to enjoy retirement. If you claim benefits at age 70 and then develop health issues at, say, age 75, you may wish you'd filed earlier.
Even if you're in fantastic physical shape, it's impossible to predict what the future has in store. More than one-third of current retirees say they had to retire earlier than expected due to health issues, according to a survey from the Aegon Center for Longevity and Retirement. If you're banking on staying healthy well into your 70s, you could potentially be putting your retirement at risk.
2. You may not live long enough to break even
Your break-even point is the age at which the total amount you receive by delaying benefits surpasses the total amount you would have received by claiming early. If you don't live long enough to reach this point, you would have received more over a lifetime if you'd claimed benefits earlier.
Your break-even age will depend on how much you receive in benefits each month. The average retiree receives just over $1,500 per month in benefits, according to the Social Security Administration. Say you have a full retirement age of 67 years old, and you'd be receiving $1,500 per month at that age. By claiming at age 62, your benefits would be reduced by 30%, giving you a monthly total of $1,050. Wait until age 70, and you'd receive a 24% boost, or $1,860 per month.
Here's how much you'd receive in benefits over a lifetime depending on what age you began claiming:
| Age | Total Lifetime Benefits When Filing at Age 62 | Total Lifetime Benefits When Filing at Age 67 | Total Lifetime Benefits When Filing at Age 70 |
|---|---|---|---|
| 67 | $63,000 | $0 | $0 |
| 70 | $100,800 | $54,000 | $0 |
| 75 | $163,800 | $144,000 | $111,600 |
| 80 | $226,800 | $234,000 | $223,200 |
| 85 | $289,800 | $324,000 | $334,800 |
Data source: Author's calculations.
In this scenario, if you were to claim benefits at age 70, you'd need to live until around age 85 to earn more over a lifetime than you would have by claiming earlier. If you have reason to believe you may not live that long, you may be better off claiming sooner rather than later.
3. You can't change your mind
Ideally, you'll have put plenty of thought into when you should claim benefits before you actually file. But if you start claiming Social Security and then immediately regret it, it's easier to undo your decision when you claim early.
If you claim benefits early, you have one opportunity to change your mind and reverse your decision. You have 12 months from the time you begin claiming to withdraw your application and claim at a later date. However, you will need to repay all the benefits you've already received. That's not always an easy task, but it can be done.
If you delay benefits, though, there's no changing your mind. When you're 70 years old and realize you should have claimed earlier, you can't go back in time and reverse your decision.
It can be tough to decide when to claim benefits, and there are advantages to delaying Social Security. In some cases, though, claiming earlier will result in a happier retirement.
