There's a reason seniors are told to choose their Social Security filing age carefully. Though your monthly benefit will be based on your earnings history, the age at which you claim it will help determine how much money you get.
The earliest age you can sign up for Social Security is 62, but filing at that point will result in a reduced benefit. If you wait until full retirement age (FRA) to file, you'll get the complete monthly benefit your wage history renders you eligible for.
There's also the option to delay your filing past FRA. For each month you do, up until age 70, your benefit will get a modest boost. On an annual basis, that boost amounts to 8%. So if you're looking at an FRA of 67, which would be the case if you were born in 1960 or later, then postponing your filing to age 70 would result in a monthly benefit that's 24% higher.
Image source: Getty Images.
You may be motivated to hold off on claiming Social Security to snag a higher payday every month. Or you may feel that despite the financial upside, waiting to file just isn't worth it, and you'd rather have your money sooner to enjoy it while you're younger.
There's nothing wrong with going that route if you're single or if you have a spouse who has a robust earnings history and is entitled to a generous Social Security benefit of their own. But if that's not the case, and you have a spouse who's financially reliant on you, then you may want to delay your Social Security filing for that reason alone.
Be mindful of your spouse's needs
It may be that your spouse didn't work full-time but looked after your children and was the primary minder of the household. Or maybe your spouse did work full-time and had a lengthy career, but wasn't employed in a particularly lucrative field.
Either way, if you were a much higher earner than your spouse, it means you're probably in line for a much higher Social Security benefit. And if you expect your spouse to outlive you (maybe because your spouse is much younger or in far better health), then leaving your spouse with a higher income stream is something you probably want to prioritize.
That's precisely why it could pay to delay your Social Security filing as long as possible -- not for your own sake, but for that of your spouse. Once you pass away, your spouse will be entitled to survivors benefits that equal up to 100% of the benefit you received. So the more money you eke out of Social Security on a monthly basis, the more your spouse can look forward to receiving.
It especially pays to consider delaying Social Security for your spouse's sake if collectively, you don't have a very robust nest egg. If you're sitting on millions of dollars in an IRA or 401(k) plan, then Social Security may be a less significant income source. That would give you more leeway to file when you please. But if you expect your spouse to be very reliant on Social Security once you pass away, then setting them up with a higher benefit is one of the greatest gifts you can leave behind.
Even if you don't manage to hold off on claiming Social Security until age 70, delaying your filing even a few months or a year could make a big difference. So before you gear up to file, think about your spouse. Better yet, involve your spouse in that decision. If you've always been a team, it's a choice you should really arrive at jointly.
