After paying into Social Security your entire career, you may be eager to get the most out of it once you're old enough to start collecting benefits. And for some people, the best way to maximize Social Security is to delay their claims until age 70.
You're entitled to your full monthly Social Security benefit based on your personal earnings history once you reach full retirement age (FRA). That age is either 66, 67, or somewhere in between, depending on your year of birth.
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However, you don't have to sign up for benefits at your precise FRA. You can file early -- beginning at age 62 -- if you're willing to lock in a lower monthly benefit for life. On the flip side, you can also delay your filing for a higher monthly benefit.
Once you turn 70, you can't grow that benefit any longer. But if your FRA is 67 and you file for Social Security at age 70, you'll snag a 24% boost -- for life.
It's for this reason that so many seniors are advised to wait until age 70 to sign up for Social Security. But if one specific situation applies to you, claiming benefits at 70 could end up being a major mistake.
You need to look at the big picture
Delaying your Social Security until age 70 might bump up your monthly benefit to a higher amount. But will it result in a higher lifetime payout from Social Security? Not necessarily. And if your health is really poor -- to the point where you're unlikely to live a long life -- then claiming Social Security at age 70 could end up being a disastrous financial move.
Let's imagine you're entitled to a full monthly benefit of $1,800 at an FRA of 67. If you file then and live until age 75, you'll collect a lifetime total of $172,800 from Social Security. But if you delay your filing until age 70 and pass away at 75, you'll only collect a total of $133,920 from Social Security -- despite boosting your monthly benefit to $2,232.
That's why you really need to look at the big picture when deciding when to sign up for benefits. And if you're not confident you'll live a long life, you shouldn't delay your Social Security claim beyond FRA.
In fact, if you're really convinced you won't live that long, it could pay to claim Social Security as early as possible. In this example, signing up at the earliest age of 62 means reducing your monthly benefit to $1,260. But you'll end up with $196,560 from Social Security in your lifetime if you live until 75. That's a higher total payout than what you'd get by waiting until FRA.
All told, it can be very difficult to predict your life span without a crystal ball. But if you have health issues that are likely to shorten your life expectancy, be sure to take that into account when claiming Social Security, so you don't end up losing out on income.
