There are different factors that go into calculating your monthly Social Security benefits. One of those factors is the number of working years you have under your belt. A second is the amount of income you earned in the course of your career.
But there's another factor that will determine what monthly payday you get from Social Security, and it's your filing age. If you wait until full retirement age (FRA) to sign up, you'll get your complete monthly benefit based on your wage history. FRA is either 66, 67, or somewhere in between, depending on your year of birth.
Image source: Getty Images.
Of course, you can file for Social Security ahead of FRA. Eligibility begins at age 62. But claiming benefits ahead of FRA means reducing them for life.
On the flipside, you can hold off on taking benefits past FRA and boost them in the process. Those delayed retirement credits run out at age 70, though, so there's a limit as to how much your benefits can increase.
Either way, the decision to claim Social Security is a big one. So if you're not sure when to sign up for benefits, ask yourself these important questions.
1. Can I stand my job a bit longer?
If you're utterly miserable at work and your job is harming your health, then you may want to get out of there ASAP -- even if that means claiming Social Security early and reducing your benefits in the process. But if you like your job well enough, or you feel you can stand doing it a bit longer, then it pays to wait on Social Security. Even if you've already reached FRA, holding off on filing for even one year could result in a monthly Social Security payday in retirement that's 8% higher than it would've been at FRA.
2. Is my health in decent shape?
If you're in good health, it could pay to wait until FRA or beyond to claim Social Security. But if your health is poor, and you therefore don't expect to live a very long life, then you may actually want to look at claiming Social Security on the early side. Though you'll reduce your monthly benefits in the process, you might end up with more lifetime income from Social Security if you end up passing away relatively young.
3. Do I have a reasonable amount of savings?
You should expect to need savings outside of Social Security to live comfortably as a retiree. If you have a few million dollars socked away in a retirement plan, then you may decide to go ahead and claim benefits early so you can enjoy that money sooner. But if you really don't have much savings, to the point where your retirement is in jeopardy, then it could pay to delay your filing as long as possible -- meaning, until your 70th birthday arrives.
4. Do I have a spouse to worry about?
It can be easier to land on a Social Security filing age when you're single, since you'll only have to consider your personal needs. But if you're married, you should know that if you pass away before your spouse, they'll be entitled to survivors benefits from Social Security that match the monthly payments you're entitled to while you're alive. So if you claim Social Security at a later age, you'll potentially leave a surviving spouse with more monthly income.
Choosing the right filing age for Social Security isn't a simple thing. But if you consider each of these points carefully, you'll hopefully have an easier time landing on a solid decision.
