There are dozens of decisions you'll need to make heading into retirement, but one of the most critical is what age to begin taking Social Security benefits.
You can file for benefits as early as age 62 or anytime after that. For each month you delay claiming (up to age 70), you'll collect larger monthly payments. File at 70, and you'll receive your full benefit amount plus a bonus of at least 24% per month.
There's not necessarily a right or wrong time to claim, as your decision will depend on your unique situation. However, research shows that some ages are better to start taking benefits than others. There are two ages, in particular, that are among the worst times to file -- but even those come with an important caveat.
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The worst time to start taking Social Security
In 2019, researchers at United Income studied retirees' claiming decisions before examining how much those retirees earned in benefits over a lifetime. They then used that data to determine how many retirees claimed at the "optimal" age to maximize their lifetime benefits.
They found that only 4% of retirees made the optimal decision to earn as much as possible, and the average retired household will therefore miss out on around $111,000 worth of lifetime income by claiming benefits at a sub-optimal age.
Around 57% of retirees could have earned more in total by waiting until age 70 to begin claiming. Meanwhile, claiming at 62 or 63 was only the optimal choice for 6.5% of retirees, researchers found.
Financially, then, ages 62 and 63 are the worst ages to begin taking benefits, as retirees who claimed at those ages were the least likely to maximize their lifetime income. However, there's more to this decision than simply finances, and there are certain situations where claiming early makes sense.
When claiming early is a smart move
By filing for Social Security as early as possible at age 62, your benefits will be permanently reduced by up to 30%. For those who will be depending heavily on their monthly checks in retirement, those reductions could be brutal.
Depending on your goals and priorities, though, claiming early isn't always a bad idea. If you have a robust retirement fund and don't necessarily need the extra money from Social Security, claiming early could help you retire a few years sooner.
Also, some people don't have the luxury of choosing when to retire. If you lose your job or are unable to work due to health issues, filing for Social Security early can make retirement more affordable. It is possible to retire in your early 60s and delay benefits, but you'll need to rely entirely on other sources of income in between -- which could risk depleting your savings too quickly.
Finally, if you're battling health issues or have reason to believe you may not live well into your 80s or beyond, you could potentially collect more in total by claiming early. You'll still receive smaller payments each month, but you may receive more over a lifetime than if you were to delay benefits.
There's no single right age to take Social Security, as everyone's circumstances and priorities are different. If you're looking to maximize your income, delaying benefits is often the best move. But be sure you've considered the big picture, because sometimes claiming early is also a smart decision.
