Choosing what age to take Social Security is one of the most important retirement decisions you'll face, as it will affect your monthly income for the rest of your life.
You can file for benefits at age 62 or anytime after, but you'll receive more per month the longer you wait (up to age 70). There's a lot of debate over when is the best time to start taking Social Security, and there are pros and cons to both claiming early and delaying benefits.
That said, while your decision will still depend on your situation, there is one age that could be a good fit for many people: full retirement age.
Why file at your full retirement age?
Your full retirement age (FRA) is the age at which you'll receive the full benefit amount you're entitled to, based on your work history and earnings. It depends on your birth year, but it's age 67 for anyone born in 1960 or later.
Data source: The Motley Fool.
Claiming at your FRA can be a smart compromise between filing early and delaying benefits, making it a good choice for those who are on the fence about when to claim.
If you file at 62, your benefits will be permanently reduced by up to 30%. While it can be a good move if you want to retire as early as possible, those smaller checks can make it tougher to afford a comfortable retirement -- especially if your savings are falling short.
On the other hand, delaying until 70 will give you the maximum possible monthly payments. However, not everyone can wait that long to start taking benefits. Also, if you develop health issues in your early 70s, you could regret waiting to take Social Security and missing out on precious time in retirement.
By filing at your FRA, you can essentially get the best of both worlds. You'll receive larger payments than you would by claiming early, but you'll also get to enjoy more time in retirement than if you were to delay benefits until age 70.
The downside to claiming at your FRA
Again, there's no one-size-fits-all answer as to when you should file for benefits. Filing at FRA may make sense for most people who are undecided, but if you have a very specific goal when it comes to Social Security, claiming at a different age may be better.
For example, if you want to earn as much as possible each month, waiting until age 70 may be wise. You'll receive your full benefit amount plus at least 24% extra each month by filing at this age, and that extra money can go a long way in retirement.
Or perhaps your primary goal is to spend as much time as you can in retirement. You don't necessarily have to take Social Security as soon as you retire, but the two often go hand in hand. If you want to have more time in your early 60s to enjoy the activities you love (or if you're battling health issues and have reason to believe you may not live well into your 70s or beyond), claiming at 62 could be in your best interest.
Claiming Social Security at your FRA can be a smart middle ground for those who are undecided on when to start taking benefits. However, the best option for you will depend on your unique situation. By considering your goals, as well as the pros and cons of claiming at various ages, it can be easier to make a decision that meets your needs.
