The Best Reason to Take Social Security Long Before Age 70

Depending on your age and stage in life, you may not be giving Social Security much thought. You should, though, because it's a critical source of retirement income for close to 50 million retired workers -- and it's likely to supply a sizable chunk of yours, too.

You can start collecting your Social Security retirement benefits as early as age 62, though that will mean your monthly checks will be smaller than they would be if you waited until what the government deems your "full retirement age." Alternatively, you can delay taking them, which will beef up the size of your benefit checks. They increase by 8% for every year beyond your full retirement age that you delay, up to age 70.

Image source: Getty Images.

For many people, delaying collecting your benefits as long as possible, up to age 70, can be smart, as it maximizes the size of your monthly checks. But for millions of others, starting early can make a lot of sense. The best reason for turning on the Social Security spigot early is this: Because you need to -- because you ended up retiring sooner than expected and/or you don't have sufficient savings to support yourself.

Unexpected early retirement

The perhaps surprising truth is that many, many people end up retiring earlier than they planned or expected -- roughly 47%, in fact, per the 2022 Retirement Confidence Survey from the folks at the Employee Benefit Research Institute. Of those who did so, 32% cited a non-COVID-19-related health problem or a disability, and 23% cited changes at their company.

It's not uncommon, after all, for companies to downsize or reorganize, leaving the people they lay off jobless. Even Amazon.com has done so, slashing more than 25,000 jobs so far in 2023. If you end up unemployed sooner than expected, and can't find a new position, it can make sense to tap those Social Security benefits as soon as you can.

Insufficient savings

Not every early retirement is due to poor health or a job loss, though -- per the 2022 Retirement Confidence Survey, fully 38% of respondents who had retired early reported doing so because they could, financially -- they had enough money saved and income streams lined up to afford an early retirement.

Still, many millions are not on track to afford early retirement, and some have saved so little that it can seem that they may not be able to retire at all. According to the Federal Reserve's "Report on the Economic Well-Being of U.S. Households in 2019," for example, the average American's retirement savings totaled just $65,000, and even for those at retirement age, the average is only about $225,200. Clearly, retiring with only $225,200 to help support you for possibly decades is worrisome.

That's an average, though -- plenty of people have saved more than that, while plenty have saved even less. Worse, the Federal Reserve found that 60% of Americans don't even know if they're on track to have saved what they need to save by retirement.

Have you saved the amount you will need for retirement -- or are you on track to? If not, and you suffer a job loss or a health setback that prevents you from working, claiming your Social Security benefits as soon as possible may be unavoidable.

Not as harmful as you think

The table below shows how much smaller or bigger your Social Security benefits will be if you claim them before or after your full retirement age (which ranges from 66 to 67, depending on the year you were born).

Source: Social Security Administration. 

Receiving monthly checks that are only 70% of the amount you might have planned to receive instead of potentially 124% of that amount might feel like a financial disaster, but it's not as terrible as it seems. You will receive many more of those smaller checks, after all, than someone who starts collecting Social Security at age 70. Indeed, the calculations that underlie those percentages were done with the goal that for a person who lives an average-length life, no matter what age they start collecting benefits at, they should receive roughly the same total amount of money from the program over the course of their retirement.

So give the question of when to start collecting your hard-earned Social Security benefits some thought, because there's no single best age at which to do so. Much will depend on your particular circumstances, and the best time for you may be well before age 70.