Many Americans who are approaching retirement age understand the financial advantages of waiting to claim Social Security. The only way to achieve the maximum retirement benefit is to hold off until age 70.
But delaying isn't for everyone. Here's the best reason to take Social Security long before age 70.
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Several valid reasons to claim Social Security before 70
Let me first acknowledge that there are several valid reasons to claim Social Security retirement benefits before reaching age 70. If you have health problems, for example, collecting Social Security could be a wise move. Before filing for retirement benefits, though, you'll want to see if you're eligible for disability benefits.
Claiming Social Security retirement benefits well before age 70 especially makes sense if you don't expect to live until the break-even age for waiting. This is the age at which your lifetime benefits from collecting Social Security before 70 will equal the lifetime benefits of waiting until 70 to take them.
Major financial challenges are another good reason to begin receiving Social Security retirement benefits years before you reach 70. For example, if you lose your job in your early sixties and can't find another one, Social Security benefits can help you make ends meet.
The best reason of all
I'd argue, though, that the best reason of all to claim Social Security before age 70 is that you're ready to retire from your current job. Many Americans simply don't want to continue working longer than they have to.
When I use the phrase "ready to retire," I mean both mentally ready and financially ready. Some people might be ready in one of those senses but not the other. It's important to closely evaluate your projected income and expenses to make sure you're financially prepared to retire.
Many Americans could find that waiting until at least age 65 to begin collecting Social Security retirement benefits is ideal. That's the eligibility age for Medicare. With healthcare ranking among the highest expenses for seniors, being able to receive Medicare in place of employer-sponsored health insurance can be a big deal.
Others could determine that holding off until their full retirement age (FRA) is better for ensuring they're financially ready. Waiting to collect Social Security retirement benefits until your FRA will allow you to avoid any financial penalties associated with receiving benefits earlier.
Note, though, that I used the phrase "you're ready to retire from your current job." For many individuals, continuing to work part-time or full-time in another job is attractive.
Keep in mind that part of your retirement benefits could be withheld if you make more than a specified annual earnings limit. In 2024, $1 of benefits will be withheld for every $2 you make above $22,320 if you're younger than your FRA throughout the year. If you reach your FRA in 2024, $1 for every $3 you earn above $59,520 will be withheld. The good news is that all of those withheld benefits will be repaid once you reach your FRA.
Waiting until 70 is still the best financial option for most
I'd be remiss if I didn't point out that waiting until age 70 to collect Social Security retirement benefits is still the best financial option for most Americans. A National Bureau of Economic Research (NBER) study published in 2022 found that over 90% of workers would receive greater lifetime benefits from Social Security if they began collecting them at age 70.
But money isn't everything. If you're ready to retire from your job (even if you're not ready to fully retire), claiming Social Security well before age 70 could be the best overall option for you.
