While some of the rules surrounding Social Security are pretty rigid, others are pretty flexible. For example, Social Security doesn't limit you to signing up at one specific age. Instead, you get a range of ages you can choose from.
The earliest age to claim Social Security is 62. And while there's technically no latest age to sign up for benefits, there's no financial incentive to delay your filing past the age of 70. So you might read that 70 is the latest filing age out there, even though you can technically sign up for benefits on your 80th birthday if that's the route you choose to take.
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But while it's a good thing that seniors get choices for claiming their benefits, not understanding one key Social Security rule could lead you to file at what ends up being the wrong time. And you might struggle financially throughout retirement because of it.
Be careful when filing early
You're entitled to your full monthly Social Security benefit based on your personal wage history once you reach full retirement age, or FRA. FRA kicks in at 66, 67, or 66 and a certain number of months, depending on the year you were born.
As mentioned, you can claim Social Security as early as age 62. But for each month you sign up ahead of FRA, your benefits get reduced. You might assume, however, that if you file for Social Security early and slash your benefits on a monthly basis, they'll be restored to their full amount once FRA arrives. But that's not how the program works at all.
If Social Security were to allow seniors to claim benefits early and then bump up those benefits to their full amount at FRA, everyone would sign up at 62 and get their money sooner. But that just doesn't make sense.
Rather, it makes sense for Social Security to penalize early filers because they're taking their benefits ahead of schedule. And that's something you must be aware of before you make the decision to claim Social Security before your FRA arrives.
If you file early thinking you won't end up locking in a lower monthly benefit for life, you might wind up uncomfortably cash-strapped once FRA arrives and you realize that isn't the case. So if you make the decision to claim Social Security early, know that the amount you start receiving each month is most likely going to be your monthly benefit for life.
That said, if you claim Social Security early but withdraw your benefits application within 12 months and repay all of the money you received in benefits to date, you'll be allowed to file again at a later age. But repaying those benefits isn't easy. So if you file early and regret it, a do-over may be off the table, leaving you with a lower monthly benefit to deal with.
Know the rules
Some people claim Social Security at the wrong time by virtue of simply buying into false information and not knowing the program's rules. The more you read up on Social Security, the more you can avoid mistakes that could end up making your retirement more financially stressful than it needs to be.
