There's a lot of advice about the best time to claim Social Security, and this makes total sense. Your age at sign-up influences the size of your monthly checks and your lifetime benefit, so it's not a decision you want to make lightly. But it's also not something you need to agonize over. Below, we'll look at why and what you should consider when deciding when to apply for Social Security.
You get money no matter what
Whether you apply for Social Security right at 62 or wait until you qualify for your maximum benefit at 70, you'll still get monthly checks to cover some of your retirement expenses. The only way you could lose out on benefits altogether is if you either never worked enough to become eligible, or you die before you're able to claim. For the majority of seniors, these things don't apply.
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That said, some claiming ages could offer you larger lifetime benefits than others. But the most valuable claiming age for you may not be the right choice for someone else. So while it's helpful to learn about the pros and cons of claiming at different ages, it's important not to fall into the trap of thinking that one is always better than another.
How to decide when you should claim Social Security
You should consider these three factors when deciding which Social Security claiming age is right for you:
- Your financial situation
- Your life expectancy
- How your decision affects others eligible to claim on your work record
You need to consider your financial situation first because it can sometimes rule out delaying benefits. If you retire in your early 60s as many do, and you don't have a lot of savings, you might need to claim early to stay out of debt. In that case, applying at 62 is the right move. But if you don't need to claim Social Security right away, you have more options.
You can claim Social Security at any time after you turn 62. But if you claim under your full retirement age (FRA) -- 66 to 67 for today's workers -- you shrink your checks by up to 30%. Every month you wait to claim boosts your checks slightly until you reach your maximum benefit at 70. Technically, you don't have to sign up then. But there's no good reason to wait longer. Doing so only costs you money.
You can see estimates of your Social Security benefit at various claiming ages by creating a my Social Security account. You'll get larger checks by starting later, but you'll also get fewer of them. You have to consider your life expectancy to figure out which could give you the most money overall.
There's some guesswork involved here, but do your best. Think about your health history and your family's health history, and try to estimate how long you'll live. Then, choose a few claiming ages you're interested in, and multiply your monthly benefits at those ages by 12 to get your estimated annual benefits. Then, multiply those by the number of years you expect to claim checks to determine your estimated lifetime benefit.
For example, a $2,000 monthly benefit claimed for 20 years gives you a lifetime benefit of $480,000. Whenever possible, choose the age you believe will give you the most money overall.
You may need to do an extra step
If you're the only one claiming on your work record, that's all you need to do. But there's an extra step if you have a spouse or dependent child who could also claim benefits on your work record. They aren't able to sign up for Social Security until you do. So it might be advantageous for you to apply a little earlier to enable them to collect checks as well.
Contact the Social Security Administration if you need assistance to determine how much a spousal or child benefit based on your work record would amount to. Then, use this information along with your estimated benefit and life-expectancy information to decide which claiming age would provide the most money to your household.
It helps to have a tentative Social Security claiming age in mind even if you're decades away from signing up. But don't feel like you're locking yourself into this plan forever. You can change your mind between now and retirement. Just be sure to also adjust your retirement savings goal to ensure you have enough money to cover all your expenses.
