You can start your Social Security benefits as early as age 62. But being eligible for benefits and actually being ready to claim them are not the same thing. In fact, if you make a hasty decision when it comes to starting your checks, that could be a choice you regret for the rest of your life.
Undoing a claim for benefits is sometimes possible after you begin receiving them, but it can be difficult. To make sure you don't put yourself in a position where you spend your later years wishing you had waited, don't file for Social Security until you see these three signs you're ready.
1. You've worked at least 35 years
Benefit checks are based on average wages from your 35 highest-earning years (after adjusting for inflation). Without a full 35 years under your belt, you'd have some years of $0 wages factored into your average.
Of course, this doesn’t mean you need to work for a full 35 years to be eligible for benefits. In fact, you can typically qualify for benefits after as little as 10 years of work. And you can claim benefits on a spouse’s work record even with no work history of your own.
But the more $0s you include in your average wages, the lower your benefits will be. So if you don't have your full time in and it's feasible to do so, consider staying in the workforce until you do.
You might not even want to rush to start your benefits as soon as you've completed your 35th year of work. Since the Social Security Administration only takes your highest 35 years of earnings into account, it can pay to work a bit longer if you're earning more at the end of your career than the beginning. For each extra year on the job at a higher salary, you push out a year of lower earnings and raise the amount of your monthly checks.
2. You understand how your decision will affect lifetime benefits
The monthly benefits you get depend not only on average wages over your career, but also on what age you start getting them.
Everyone has a full retirement age, which is the designated age at which they'll get their standard benefit. It's between 66 and 2 months and 67, depending on when you were born. Although it's possible to claim benefits before this -- as early as age 62 -- doing so reduces the size of monthly checks. It's also prudent in many cases to wait until after FRA to start benefits, as doing so can earn you delayed retirement credits up until age 70. These raise your monthly benefit.
Monthly income and lifetime income aren't the same. If you wait to start benefits to qualify for higher checks, you may pass away before the extra monthly money makes up for income you missed by not claiming as early as possible. But if you live a long time, claiming benefits early and accepting a permanent reduction in your checks would mean you get less total money over time.
There's also another complicating factor to consider, in that your decision to claim benefits ahead of schedule could reduce your spouse's survivors benefits. Until you understand how your age impacts both your benefits and those of your potential surviving spouse, don't file for checks.
3. You have a comprehensive plan to support yourself in retirement
If you're anticipating that you can quit working and live on Social Security alone, you're going to end up disappointed. Your benefits are designed to be just part of your income as a senior, replacing about 40% of pre-retirement earnings. The rest of your money should come from savings and any pension money available to you.
Make sure you understand exactly how much income you'll have from all possible sources prior to retiring so you don't find yourself facing a financial shortfall.
By understanding the role Social Security can play, making an informed choice about how your claiming decision will affect your lifetime income, and working a full 35 years (or more), you can ensure you're ready to claim Social Security without future regrets.