You're entitled to your full monthly Social Security benefit based on your personal wage history once you reach full retirement age, or FRA. That age is either 66, 67, or somewhere in between, depending on the year you were born.
However, you definitely don't have to wait until FRA to sign up for benefits. You're allowed to claim them as early as age 62.
The upside of filing for Social Security ahead of FRA is clear -- you get your money sooner without having to wait. But there's a very big downside, and it's slashing that monthly benefit for life.
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To give you a sense of the sort of income hit you might be looking at, let's say you're entitled to a monthly benefit of $1,700 at a FRA of 67. Filing at age 62 will cut that benefit by 30%, leaving you with $1,190 a month instead. All told, that's $6,120 in annual income you could end up losing out on.
Now you may run the numbers and decide that slashing your Social Security benefits is worth doing in order to get your money when you want it. But before you make that decision final, be sure to ask yourself one important question.
Will I be hurting my spouse?
If you're single, you can possibly base your Social Security filing decision on your own needs and no one else's. But if you're married, you may want to think twice before claiming Social Security early -- especially if you're the higher-earning spouse and you expect to pass away well ahead of your spouse.
Once you pass away, your spouse will be entitled to survivors benefits from Social Security. Those benefits will be the equivalent of what you collect on a monthly basis. As such, if you opt to claim Social Security early, you won't just be slashing your own benefit -- you could end up slashing the benefit your spouse comes to rely on heavily in your absence.
To be clear, you may be perfectly fine to sign up early for a reduced benefit if your spouse was a fairly high earner and is therefore entitled to a decent Social Security benefit of their own. Or, it could be that you have a lot of money saved up for retirement in an IRA or 401(k) plan, and so a hit to your surviving spouse's Social Security income isn't such a big problem.
The point, however, is that you must consider your spouse's needs before making the decision to file for Social Security early. In fact, it's a good idea to review your filing options jointly and come to a decision together so that there are no bitter feelings or regrets down the line.
You may end up having to compromise on your ideal filing age to address your spouse's financial concerns. But if that's what it takes to avoid conflict and help your life partner avoid money-related worries for years on end, then it's a route very much worth taking.
