When it comes to planning for retirement, choosing the right age to begin taking Social Security is critical. Your age will have a major effect on the amount you receive each month in benefits, and filing at a less-than-ideal time will affect your monthly income for the rest of your life.
Age 62 is the earliest age you can begin claiming, or you can wait and file at any point after that. The longer you wait (up to age 70), the larger each of your checks will be.
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The best age at which to file will depend on your unique situation, and there are good reasons to consider both claiming early and delaying. But research shows that for most retirees, there's a clear answer as to when you should claim -- and it could potentially boost your income by more than $100,000 throughout retirement.
How your age affects your benefit amount
Before you decide on when to file for benefits, it's important to understand exactly how your age will affect the size of your payments.
To receive the full benefit you're eligible for based on your work history, you'll need to wait until your full retirement age (FRA) to file. Everyone's FRA will be between ages 66 and 67, and it's age 67 for anyone born in 1960 or later.
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By filing as early as possible at age 62, your benefits will be permanently reduced by up to 30%. If you delay claiming until after your FRA, you'll receive your full benefit plus a bonus. At age 70, you'll collect an extra 24% to 32% more each month in addition to your full benefit amount.
The best age to start taking Social Security
Again, there's no single correct answer as to when you should file for benefits, as it will depend on your unique situation.
That said, researchers at United Income studied retirees' claiming decisions as well as their total income throughout their retirement. They then determined how many retirees filed for Social Security at the optimal age to maximize their lifetime income.
The worst age to start taking Social Security, according to the data? Prior to age 64. Researchers found that filing at ages 62 or 63 was the optimal choice for only 6.5% of retirees, even though over 70% of retirees claim at these ages.
The best claiming age to maximize lifetime income, they found, was age 70. Only 4% of retirees claim at this age, according to the data, yet 57% of retirees could have earned more over a lifetime by delaying benefits as long as possible.
These decisions can have an enormous effect on your retirement, too. The experts also noted that the average retired household misses out on around $111,000 in lifetime income by claiming Social Security at the sub-optimal age.
When it pays to claim early
All this being said, there's an important caveat to consider here. This data only accounts for how claiming age affects retirees' financial outlook, and finances are only one part of the equation.
If your primary goal in retirement is to maximize your monthly income, waiting until age 70 to file is your best bet. This can result in collecting hundreds of dollars more per month for the rest of your life, which can go a long way -- especially if your savings aren't as strong as you'd like.
But there are valid reasons to consider claiming early, too, such as:
- You're battling health issues: If you don't expect to spend several decades in retirement, claiming early could pay off. While delaying benefits can maximize your income, that may not be worth it if it means giving up several years of precious time in retirement.
- You don't want to bet on your longevity: Even if you're healthy and have reason to believe you'll have many more active years, life can sometimes throw curveballs. Delaying benefits often involves betting on your longevity to a degree, and if you suddenly develop health concerns in your early 70s, you could regret not claiming earlier.
- You want to retire early: Finances aren't everything in retirement. Maybe you have a stressful career or simply want to retire as soon as possible, and you're willing to make financial sacrifices to retire early. Claiming early will still result in smaller checks each month, but it can make early retirement more affordable when you don't have to rely solely on your savings to make ends meet.
When it comes to finances, research shows age 70 is the best time to claim for most retirees. But it's also important to look at the big picture before you make your decision. By considering your priorities and goals in retirement, it will be easier to decide on the best choice for your situation.
