Seniors get choices when it comes to claiming Social Security. It's possible to sign up at any point starting at age 62. But if you want the complete monthly benefit you're entitled to based on your individual earnings history, then you'll need to wait until full retirement age (FRA) to sign up, which is 67 for those born in 1960 or later.
Furthermore, if you're willing to delay your filing beyond FRA, you can snag a boost to your monthly benefit. That option exists up until age 70 only, so there's no sense in delaying your claim past that point.
When filing for Social Security, you may be inclined to try to snag the highest monthly benefit you can. And because of that, you may be motivated to file at age 70.
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But rather than focus on monthly benefits, it's a good idea to focus on lifetime benefits. Doing so might help guide you to a different -- and potentially better -- decision.
Look at the big picture
Claiming Social Security early will result in a lower monthly benefit. It won't necessarily result in a lower lifetime benefit, though. And delaying your filing past FRA won't necessarily give you more income from Social Security in your lifetime.
Let's say you're entitled to a monthly benefit of $2,000 at an FRA of 67. Claiming benefits at age 70 will give you $2,480 a month, while filing at age 62 will leave you with $1,400 a month. So at first, waiting until age 70 to sign up might read like the better choice.
But watch what happens if you only live until age 76. In that case, here's what your lifetime benefit looks like based on your filing age:
- Age 62: $235,200
- Age 67 (FRA): $216,000
- Age 70: $178,560
Clearly, in this scenario, delaying Social Security means losing out on income all-in. And that's really not what you want.
As such, you need to take your life expectancy into account when signing up for benefits. And while you can't predict that with certainty, if your health is poor or previous generations within your family passed away relatively young, you can use those pieces of information to help guide your decision.
Waiting isn't always better
People who don't have a lot of retirement savings are often advised to delay Social Security to help compensate. But that advice really only holds up when you live an average lifespan or beyond. If you have reason to think you won't, then holding off on benefits past FRA generally won't be the best choice financially. And if you have reason to think you'll pass away at a relatively young age, then you may want to sign up for Social Security as early as you possibly can.
Obviously, all of this is tricky business. Even if your health is great going into retirement, you don't know when it might worsen. The point, however, is to focus more on lifetime benefits than monthly benefits in the course of claiming Social Security so you can get the most money you can out of the program.
