Retirement is becoming more expensive by the year, and millions of seniors depend heavily on Social Security to help make ends meet. One of the most important retirement decisions you'll face is, what's the best age for you to start taking benefits? You can file for Social Security as early as age 62 or delay until age 70, but your choice will have an enormous impact on your monthly benefit amount.
This is a highly personal decision, and your choice will depend largely on your unique situation. But research suggests there could be an ideal (and less-than-ideal) age at which to start taking Social Security.
How your age affects your benefit amount
Several factors impact the amount you'll collect each month from Social Security, including the number of years you've worked, your earnings history, and your age. To receive the full benefit amount you're entitled to based on your work record, you'll need to wait to file until your full retirement age (FRA), which will depend on your birth year.
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The earlier you file for benefits, the smaller each payment will be. If you begin claiming as early as possible at age 62, your monthly checks will be reduced by up to 30%. But if you wait until age 70 to claim, you'll collect your full benefit amount plus a bonus of at least 24% per month.
These adjustments are permanent. So if you file early, you won't receive larger payments once you eventually reach your FRA.
The best and worst ages to claim Social Security
Again, filing for Social Security is a personal decision, so there's no one-size-fits-all answer as to when you should begin claiming. That said, researchers at United Income studied retirees' claiming decisions and how those choices affected an individual's lifetime benefit amount. They then used that data to determine how many retirees made the "optimal" decision -- meaning they earned as much as possible from Social Security throughout their lives.
The report revealed that only 4% of those surveyed claimed benefits at the optimal age, and the majority of older adults claimed Social Security too early.
Around 57% of survey participants could have earned more over a lifetime if they'd waited until age 70 to file for benefits. This suggests that delaying benefits is a financially smart decision for most seniors.
At the other end of the spectrum, only 6.5% of adults made the optimal decision by claiming at ages 62 or 63. This implies that claiming earlier could hurt your lifetime earnings potential.
A few caveats to consider
Of course, this isn't a hard-and-fast rule. While delaying benefits will result in larger payments each month and could increase your lifetime earnings, that doesn't necessarily mean it's the best choice in all situations.
For example, if you're battling health issues and have reason to believe you may live a shorter-than-average life, delaying Social Security may not make sense for you. In this case, claiming earlier could potentially result in collecting more in total over your lifetime.
Also, your claiming decision may not necessarily come down to dollars and cents. If you have a robust retirement fund and won't be relying heavily on Social Security, you may choose to claim early, despite receiving smaller checks each month.
Before you begin claiming, be sure you've weighed the pros and cons of claiming early and delaying. When you know all of your options (and how they will affect your benefit amount), it will be easier to make the right decision for your situation.
