Determining what age to begin taking Social Security is a crucial retirement decision, as it will affect your monthly income for the rest of your life.
Age 62 is the earliest you can begin claiming benefits, but filing at this age will slash your monthly payments by up to 30%. Delaying benefits until age 70, on the other hand, will give you a massive boost -- sometimes resulting in hundreds of dollars more per month.
There are merits to both claiming early and delaying, so there's no single correct age to file. That said, researchers have crunched the numbers to see what age would benefit the most people -- and there's a very clear-cut answer.
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What's the best age to take Social Security?
In 2019, researchers at United Income studied retirees' claiming decisions as well as how those choices affected their income. They then used that data to determine how many retirees made the "optimal" claiming choice, meaning they received as much as possible from Social Security over a lifetime.
They found that for 6.5% of retirees, claiming at age 62 or 63 was the financially optimal decision. However, 57% of retirees could have earned more in total by waiting until age 70 to claim.
Claiming at a different age would have had an enormous impact on these retirees, too. Researchers found that the average retired household misses out on around $111,000 worth of income over a lifetime by claiming at the sub-optimal age.
So what does this mean for you? Financially, most older adults are better off waiting until age 70 to take Social Security. But finances are only one part of the equation, and there are still good reasons to consider taking benefits at 62.
When it pays to claim early
Filing at 62 will permanently reduce your monthly benefit amount, but in some cases, that's a worthwhile sacrifice.
For example, maybe you have a robust retirement fund and want to retire earlier. If you don't necessarily need the extra cash you'd receive by delaying benefits, it may make sense to file at 62. You'll still receive smaller payments, but you can retire sooner without having to rely solely on your savings.
Filing early may also make sense if you have reason to believe you may live a shorter-than-average lifespan. If you don't expect to live well into your 70s or beyond, you could actually receive more over a lifetime by claiming early. While this isn't the most pleasant topic to think about, having realistic expectations about your health could help you make the best Social Security decision.
Finally, if your spouse is also entitled to Social Security, you may choose to be strategic about when you both claim. One of you may file at 62 to have some extra income earlier in retirement, for example, while the other waits until age 70 to earn those larger checks.
There's not necessarily a right or wrong time to take Social Security, as it will depend largely on your situation. While it often makes the most sense financially to wait until age 70, there are valid reasons to consider claiming at 62, too. When you understand the pros and cons of all your options, it will be easier to make the best decision for your retirement.
