During your career, it's natural to take steps to score the highest possible paycheck. Those could include building the right skills, chasing promotions, and networking your way to better offers.
In retirement, it's natural to want to score the most generous income possible, too. And a big part of that involves claiming Social Security strategically.
Image source: Getty Images.
You may be inclined to delay Social Security as long as possible for the promise of larger monthly benefits. But while the idea of boosted benefits might seem nice, focusing on snagging the highest monthly paycheck possible may not be your best move.
Make sure you're claiming Social Security strategically
The monthly benefit Social Security pays you in retirement hinges on two things -- your earnings history (including the number of years you worked) and the age you sign up to start getting benefits.
You can file for Social Security at any point in time once you turn 62. If you want your monthly benefits without a reduction, you'll have to wait until full retirement age, which is 67 for anyone born in 1960 or later.
You also have the option to delay Social Security past full retirement age for boosted checks. Each year you hold off beyond that point boosts your benefits by 8%. That incentive, however, runs out at age 70.
Still, if you're eligible for your complete Social Security benefit at 67 and you wait until 70 to sign up, you're looking at boosting your monthly benefits by 24%. That's a nice increase. But it's also not necessarily a boost you should chase.
The reason? Even though claiming Social Security late means getting larger monthly checks, it won't necessarily result in a larger lifetime benefit in total.
If you end up living a long life, a delayed Social Security filing could end up making financial sense. But if you pass away in your early or mid-70s, or even your late 70s, you could lose out on a boatload of lifetime Social Security income by taking benefits at 70.
The typical Social Security recipient today collects about $2,000 a month. If that's your benefit at age 67, it means you'll be eligible for about $2,480 if you wait until 70 to sign up.
But in that scenario, you need to live past age 82 and 1/2 to come away with more lifetime Social Security income with a delayed claim at 70. So if you're not confident that will be the case, or you don't want to take the chance, then it could pay to file for benefits sooner.
You need to look at the big picture
It's easy to see why you'd be inclined to chase the largest monthly Social Security check you can get. But delaying benefits doesn't necessarily make sense for everyone.
Before you make the decision to delay your filing, think about your health and how long your parents lived. And even if you're in great health and have parents who are still alive in their 80s or 90s, consider whether you want to take the risk of waiting on Social Security and potentially ending up with less lifetime income. You may decide that it's best to claim benefits earlier than age 70 just in case you don't end up living as long as expected.
