Social Security is a program that millions of seniors have come to rely on for income. And chances are, you'll be in a similar boat once your retirement rolls around.
That's why you must file for benefits really carefully. If you choose your Social Security filing age at random, it might end up hurting you financially.
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An overview of your options
When it comes to claiming Social Security, you get a pretty wide range of choices. You can sign up for benefits as early as age 62, and from that point on, you can technically file at any time. But there are some key ages you should be aware of.
Full retirement age, or FRA, is when you're entitled to your complete monthly Social Security benefit based on the wages you earned throughout your career. If you were born in 1960 or later, FRA is 67. If you were born sooner, it's either 66 or 66 and a specific number of months. This means that if you claim Social Security at age 62 or any age prior to FRA, your monthly benefits will be permanently reduced.
Meanwhile, at 70, delayed retirement credits stop accruing when you've pushed off your filing beyond FRA. For each year you postpone your filing after FRA arrives, your benefits get an 8% boost. But that perk isn't indefinite, so while you can claim Social Security after age 70, there's no financial incentive to do so.
What's the right filing age for you?
Since your filing age for Social Security will directly impact how much income you'll get each month for life, it's important that you make your decision carefully. One trap you don't want to fall into is assuming that age 62 is the best time to sign up for benefits because you get your money sooner.
If your FRA is 67, filing at age 62 will slash your monthly benefits by 30%. That's a huge hit to deal with for life.
Now a big part of your Social Security filing decision should hinge on what other income is available to you. If you have a nice amount of savings, you may not have to wait until age 70 to file, allowing you to retire earlier (assuming you're filing and retiring at the same time). But if you don't have much in the way of savings, postponing your Social Security claim as long as possible could be a necessary move.
That said, the concept of lifetime Social Security should also play into your decision. Filing at age 70 might raise your benefits on a monthly basis, but you'll be waiting a long time to start getting them. If your health is poor and you don't anticipate living a particularly long life, claiming Social Security at FRA or even sooner could make more financial sense for you.
Either way, make sure to put plenty of thought into your filing decision rather than dive in. Social Security will likely play a big role in your retirement, no matter what. Be sure to understand the implications of filing at different ages before you make your choice official.
