It's typically advised that most people wait until at least their full retirement age to claim Social Security retirement benefits, but there's always exceptions to the rule.
In particular, the calculus changes when factoring in a spouse's benefits in addition to your own. Whether you're still married, widowed, or divorced, there can be good reasons to claim your Social Security benefits as early as possible.
Here are three times it makes sense to claim well before full retirement age.
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1. Your lower-earning spouse is already at full retirement age
If you were the big breadwinner in the family, but your spouse has already reached full retirement age, it may make sense to claim early.
There are a few things to understand about spousal benefits:
- Spousal benefits can be as much as half the worker's full retirement benefit.
- The benefit is maximized by claiming the spousal benefit at full retirement age. There are no delayed retirement credits.
- You're ineligible to claim spousal benefits until the worker has also claimed Social Security.
If you earned significantly more than your spouse and they would see a big boost in their benefits from claiming the spousal benefit at full retirement age, it might make sense for you to claim as soon as you can. Otherwise, you'll have to accept getting only your spouse's substantially lower retirement benefit payment for years until you claim. While everyone's financial situation is different, many couples will maximize their combined Social Security benefits if the higher earner claims early in situations like this.
2. You're eligible for survivor benefits
If you're a widow or widower, it will always pay to claim one set of your Social Security benefits early.
Survivor benefits are worth up to 100% of the deceased's full retirement benefit. Unlike spousal benefits, the survivor benefit doesn't require you to claim your personal benefit at the same time. That gives you an opportunity to claim either your own benefit or your survivor benefit early and let the other benefit increase in value over the next five or 10 years.
If your personal benefit will be significantly lower than your survivor benefit at full retirement age, you may do well to claim your personal benefit at age 62 and switch to your survivor benefit at age 67 when it reaches its maximum value.
For example, if you're eligible for a $2,000 survivor benefit or a $1,300 personal benefit at full retirement age (67), it typically makes sense to claim your personal benefit early at age 62. You'll collect a reduced benefit of $910 for five years, but then you can switch to a benefit of $2,000 at age 67. While there's a possibility the strategy results in a lower lifetime payout if you don't live into your late 70s or early 80s, the break-even age is far earlier than the typical claim-versus-delay calculation.
On the other hand, if your maximum personal benefit from delaying until age 70 is greater than your maximum survivor benefit, it probably makes sense to claim your survivor benefit early. You can claim your survivor benefit as early as age 60.
For example, if your personal full retirement benefit is $1,300 and your survivor benefit is $1,500, it probably still makes sense to claim your survivor benefit at age 60. You'll receive $1,073 in monthly benefits from ages 60 through 70, and then you'll be eligible to collect your personal benefit of $1,612 per month.
3. Your higher-earning spouse has health issues
If you're in the unfortunate situation where your spouse is likely to pass earlier than average due to poor health, it may make sense to claim your personal benefit early.
When your spouse passes, you'll become eligible for the survivor benefit, which allows you to switch from your benefit to your deceased spouse's benefit. It can be worth up to 100% of their full retirement benefit. The minimum benefit is based on at least 82.5% of the deceased's full retirement benefit, so even if your spouse elects to claim at 62 due to their poor health outlook, the survivor benefit can work in your favor.
Importantly, you can get the maximum survivor benefit starting at age 67, so you wouldn't have to delay your personal benefit until age 70 to get the most out of it. The end result is more years of collecting a bigger benefit.
Personal finance is personal
There are a lot of different factors that can impact the optimal Social Security claiming strategy for you and your spouse. The benefit amount is simply step 1. You also need to factor your personal retirement savings, health, and taxes into the equation. You may want to consult a professional to help determine an optimal claiming strategy and how it fits in with the rest of your retirement planning. But the situations outlined above should give you something to think about when it comes to claiming Social Security early.
