One of the biggest financial decisions you might have to make in the context of your retirement is figuring out when to claim Social Security. Although the monthly benefit you're entitled to is based on your personal wage history, your filing age also helps determine how much monthly income you get.
You're allowed to sign up for Social Security at any point once you turn 62. And if you were born in 1960 or later, your full retirement age is 67. That's when you can receive your complete Social Security benefit each month without a reduction.
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But there's also the option to delay Social Security past full retirement age. For each year you do until age 70, your benefits rise 8%.
You may like the idea of being able to collect the largest Social Security check possible. But here are a few reasons to reconsider claiming Social Security at 70.
1. Your job has started making you miserable
For many people, the option to claim Social Security at 70 hinges on being able to work until 70. But if your job has worsened and is wreaking havoc on your mental and physical health, you may want to stop working sooner -- even if that means claiming Social Security at an earlier age and locking in a smaller benefit than what you'd get at 70.
If you've worked all your life, it's one thing to push yourself to keep at it until full retirement age. It's another thing to plug away for three extra years when your job is making you miserable. So, if you have a new boss who's constantly making demands, or if your workload has shifted and you're now spending your days doing tasks you hate, you may want to consider ending your career and giving yourself a break.
2. Your health has taken a turn for the worse
Unfortunately, you can be healthy your entire life, only to have issues crop up as you get older. If your health has recently declined, that should prompt you to rethink claiming Social Security at 70 for one big reason -- it could leave you with less lifetime income.
Delaying Social Security commonly makes sense when you anticipate living a pretty long life. But if your health issues have you worried that you won't, it makes sense to take your benefits sooner rather than later. If you delay Social Security until 70 but pass away five or six years after the fact, you'll likely end up with much less lifetime income than you could've gotten by filing earlier.
3. You realize you've saved more than enough to claim benefits sooner
If you're someone who will be very dependent on Social Security to pay the bills in retirement, it could make sense to claim benefits at 70 for larger monthly checks. But your retirement savings may be more robust than you remember. So, it pays to take a look at your various retirement accounts and see where they stand.
Say your investments have grown your nest egg to $2 million. At that point, you may not need a boosted monthly benefit from Social Security because you have enough savings to manage just fine with smaller checks. And if that's the case, claiming benefits at full retirement age, or even a bit sooner, could give you an opportunity to use that money to travel and tackle big goals while your health is still strong.
Claiming Social Security at 70 certainly makes sense for some people. And the financial upside could be huge under the right circumstances. But if any of the above apply to you, you may want to reconsider choosing 70 as your Social Security filing age.
