Are you confused as to when you should sign up for Social Security? Have you spent months considering your different options, only to still have no idea what filing age is right for you?
You're in good company, and understandably so. Social Security is a major income source for many retirees, with millions of seniors today relying heavily on those benefits to make ends meet. So it stands to reason that you'd want to get your filing decision right.
But actually, there may not be such a need to stress over your Social Security filing age. Believe it or not, that age may not matter so much in the grand scheme of things.
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What different filing ages mean for you
You're allowed to sign up for Social Security once you turn 62. And while there's no "final age" to claim benefits, it's a known thing that signing up after age 70 doesn't make any sense. That's because age 70 is when you stop accumulating delayed retirement credits for postponing your claim beyond full retirement age.
Now let's talk about full retirement age. If you were born in 1960 or later, it's 67. If you were born earlier, it's 66 or 66 and a specific number of months.
But either way, full retirement age is when you get your complete monthly Social Security benefit based on your personal earnings history. This means that if you were born in 1961 but claim Social Security at age 66 and 10 months, you're going to lose a small amount of your monthly benefit -- on a permanent basis -- for a slightly early filing.
You should also know that the difference between claiming Social Security at age 62 versus a full retirement age of 67 is roughly 30%. A $2,000 benefit at 67 becomes $1,400 at 62, but the closer you are to full retirement age when you sign up early, the less of a reduction you'll face.
On the flip side, your monthly benefit rises 8% for each year you delay Social Security past full retirement age. Since that incentive runs out at age 70, if you're eligible for your complete benefit at 67, the maximum increase you can snag is 24%.
Why your filing age may not matter as much as you think it does
One thing Social Security doesn't necessarily advertise broadly is that you're likely to end up with the same lifetime benefit, regardless of when you file. Rather, it's that your monthly benefit is going to differ based on the filing age you choose.
Of course, this assumption is based on you living an average lifespan. And if you have reason to believe that you won't, then you do have put more thought into your Social Security filing decision.
That said, the general convention is that if you don't expect to live very long into retirement, an early Social Security claim makes sense, as it'll likely result in the most lifetime income for you. A late filing makes sense if you have a family history of longevity and your health as a senior is outstanding.
But let's assume you have average health and expect to live an average lifespan. At that point, there's a good chance you'll largely break even regardless of whether you claim Social Security at 62, 70, full retirement age, or another point in time.
And to be clear, this isn't to say you'll break even to the dollar. Rather, the difference in lifetime income from one filing age to another may not be so substantial if you live an average lifespan.
And if you're wondering how that logic works, it's simple: Claiming Social Security at 62 shrinks your benefits on a monthly basis. It also gives you a greater number of monthly benefit checks than a later filing.
Claiming Social Security at 70 boosts your benefits on a monthly basis. But you also get fewer individual payments to collect.
At the end of the day, though, the amount of lifetime income you receive from Social Security may not differ all that substantially based on when you file. So if you've been stressing out over when to sign up, stop.
In the absence of being able to make a decision, you may want to land on a filing age of full retirement age because it's a middle-ground solution. But don't torture yourself on the road to signing up, when your decision may not matter as much as you think it does.
