Social Security is fairly flexible when it comes to letting you sign up. The earliest age to file for benefits is 62, and you can claim your full monthly benefit based on your personal earnings history at age 66, 67, or somewhere in between at a point known as full retirement age (FRA).
You'll also be rewarded for delaying your Social Security claim beyond FRA. For each month you hold off on filing, your benefits will increase by 2/3 of 1%. This amounts to an annual boost of 8%.
Once you turn 70, you can't grow your benefits, so that's considered the latest age to sign up for Social Security. But if you file at age 70 with an FRA of 67, you'll boost that income stream by 24%.
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In spite of that, waiting until age 70 to sign up for Social Security doesn't always pay. And in some situations, filing much sooner could work to your financial benefit.
Look at the big picture
Your goal in collecting Social Security should be to get as much lifetime income from the program as possible. And you may end up achieving that by virtue of getting paid less each month.
The sooner you file for Social Security, the smaller your monthly benefit will be. But if you don't end up living a very long life, then filing sooner rather than later could actually work to your advantage. And if you're not confident in your ability to live a longer life, then you may want to sign up for benefits long before your 70th birthday.
Imagine you're in line for a $1,700 monthly benefit at an FRA of 67. Filing at age 62 will cut that monthly payment down to $1,190, whereas delaying your filing until age 70 will give you $2,108 a month.
But these are all monthly figures, not lifetime figures. If you end up passing away at age 77, which is fairly young but not notably young, you'll end up with the most amount of money in our example by claiming benefits at 62. In that case, your total lifetime benefit will amount to $214,200, whereas it'll amount to $204,000 and $177,072 at ages 67 and 70, respectively.
You may not want to gamble
Delaying Social Security could work to your financial advantage if you wind up living a longer life than the typical retiree. But if that doesn't happen, then filing at age 70 could mean getting less money from the program in your lifetime. If you'd rather not take that gamble, make a point to sign up well ahead of your 70th birthday.
You may decide to claim benefits at age 62 to get your money as soon as possible. Or you may decide that waiting to file until age 65 or 67 is a decent compromise. You may even choose to wait until age 70 based on the good health you've enjoyed so far. The key, however, is to understand the risks involved in delaying Social Security benefits before making that call.
