You're entitled to your complete monthly benefit from Social Security once you reach full retirement age (FRA). If you were born in 1960 or later, that age is 67.
But you don't have to file for Social Security at your precise FRA. You could instead opt to delay your claim for a higher monthly benefit for life.
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In fact, for each year you hold off on claiming Social Security past FRA, your benefits get an 8% boost. So if you sign up at age 70 instead of at a FRA of 67, you'll get a monthly benefit that's 24% higher throughout retirement.
Clearly, delaying Social Security can be a smart move in some cases, such as if you're low on savings or simply want a higher income to enjoy throughout your senior years. But here are three reasons why claiming Social Security beyond FRA may not be a good idea at all.
1. Your health isn't great
When you delay your Social Security claim, you force yourself to miss out on a few years of collecting benefits. So it's important to make sure you'll live long enough to make up for those missed benefits and come out ahead financially.
The tricky thing is that it's pretty much impossible to determine how long you'll live. But if you're reaching FRA and your health is already not in good shape, then you may want to sign up for Social Security sooner rather than later. You may not boost that income on a monthly basis by going this route, but it could result in a higher lifetime Social Security payout if you don't end up living very long.
2. You're out of a job and need money
Some people are willing to work well into their late 60s or beyond. But what if you don't have that choice?
If you've recently lost your job and are struggling to find a new one, you don't want to deplete your savings or, worse yet, rack up costly credit card debt just to cover your basic expenses. So if you have the option to sign up for Social Security, it pays to do so rather than subject yourself to financial ruin in order to delay your claim.
3. You're signing up for spousal benefits
The option to score an 8% boost to your monthly Social Security benefits applies when you're filing based on your own earnings record. But if you're claiming a spousal benefit, then a delayed filing doesn't make sense.
The nice thing about spousal benefits is that you can collect Social Security even if you never worked a day in your life. And if you sign up for spousal benefits at FRA, you'll be entitled to 50% of the monthly benefit your current or former spouse is receiving. (That's right -- you don't need to still be married to collect a spousal benefit from Social Security.)
But one thing you should know is that you won't gain anything financially by delaying a spousal benefit, since this type of Social Security benefit can't get a boost. So if you're eligible for your full spousal benefit at a FRA of 67, that's exactly when you should sign up.
In many scenarios, waiting to claim Social Security is a smart decision. But if you're in a situation where your health is poor, you need money immediately, and you're signing up for spousal benefits only, then you're generally better off not delaying your filing and instead snagging your benefits sooner.
