Whether you're sitting on a pile of personal savings or you barely have a dollar to your name, chances are you probably want to get as much money from Social Security as you can. How much you receive largely depends on your income during your career. But there is one major decision you make later in life that affects the size of your checks: your claiming age.
You can begin claiming Social Security at any point after you turn 62. You might be thinking of applying right away so you can get the most money possible, but this isn't always your best option. If you want to make the right call, you need to understand exactly how your claiming age affects your checks.
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How your Social Security claiming age affects your benefit
You can claim Social Security starting at 62, but you don't qualify for your full benefit until you reach your full retirement age (FRA). This is 67 if you were born in 1960 or later. Some older adults have FRAs as young as 66.
When you claim benefits sooner than your FRA, you shrink your checks by up to 30%. Put another way, every month you delay Social Security increases your checks.
And that doesn't stop at your FRA. You can continue growing your checks until you qualify for your maximum benefit by claiming at 70. This could add as much as 32% to what you would qualify for at your FRA.
The difference can be pretty substantial. The average monthly benefit for those claiming at 62 in 2023 was $1,298 per month, or $15,576 annually. Those who claimed at 66 got about $1,740 per month, or $20,880 annually. And 70-year-old claimers took home about $2,038 per month, or $24,456 annually. That's nearly $9,000 more per year than what the earliest claimers got.
Some people take this as evidence that delaying your Social Security claim is the best option. But the truth is a little more complicated.
How to decide when you should claim Social Security
It's true that delaying Social Security can give you a larger lifetime benefit, but this might not be the case if you have a short life expectancy. Delaying your checks makes each one larger, but you also get fewer of them. This strategy only really pays off if you live into your 80s or beyond.
Those with shorter life expectancies may be better off claiming earlier so they can get as much money as possible before they pass away.
You also have to consider your financial situation. Even if delaying Social Security would net you a larger lifetime benefit, it might not be feasible if you have no other way to cover your expenses until you're ready to sign up. You don't want to incur debt that you could avoid with Social Security. In that scenario, claiming early could also be a better option for you.
It's ultimately your call, and your plans could change over time as you get closer to retirement. Just make sure you're comfortable with the trade-offs that come with your claiming age.
And if you don't want one extreme or the other, you can always choose something in the middle, like claiming at your FRA, to give yourself the best compromise.
