There's a good chance Social Security will be a big part of your retirement income picture. Hopefully, you won't have to live on your monthly benefits alone. But it wouldn't be unusual for those benefits to be essential to your ability to cover your expenses.
That's why it's so important to choose the right Social Security filing age. Though your monthly benefits are calculated based on your earnings history, the age you choose to start benefits at will dictate how much monthly income the program gives you.
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Three of the most common ages to claim Social Security for workers today are 62, 67, and 70. But clearly, that's a pretty big range. Let's examine the pros and cons of filing for Social Security at each of these ages so you can make a more informed decision.
Age 62
Age 62 is the earliest age to sign up for Social Security. And it could mean facing a large reduction to your monthly checks. That's the downside.
On the plus side, you get your money sooner, which could be a very good thing if the stress of your job is harming your health and you need to leave it, or if you have to step into a caregiving role and can't continue to work on a full-time basis.
Also, if you happen to have decent retirement savings and can afford a reduction to your monthly benefits, filing for Social Security at 62 could mean getting access to money that allows you to fulfill some of your dreams, like traveling to far-off destinations. You may not be in good-enough health to take those trips if you wait five years or longer.
Age 67
If you were born in 1960 or later, 67 is full retirement age for Social Security purposes. This means it's the age when you can claim your monthly benefits without a reduction.
The upside of filing for Social Security at 67 is that you're not waiting an unreasonably long amount of time to get your money. Sure, it does mean sitting tight for five years compared to age 62. But because Americans on a whole are living longer these days, if you decide to work until age 67 and sign up for Social Security at that time, you might still have plenty of years to enjoy retirement.
On the other hand, you will be missing out on five years of monthly checks, albeit smaller ones, if you wait until age 67 to claim Social Security. If you have health issues and don't expect to live a very long life, you may want to favor an earlier filing age. Even though it could mean less income on a monthly basis, it could put more Social Security in your bank account on a lifetime basis.
Age 70
There's technically no final age to claim Social Security. But from a financial standpoint, it doesn't pay to delay Social Security past age 70, so it's typically referred to as the latest age to sign up.
The upside of waiting until 70 to claim Social Security is that for each year you delay past full retirement age, your monthly benefits get an 8% boost. And larger monthly checks could lead to more financial stability throughout retirement.
The downside, of course, is having to wait a pretty long to start getting money that's available to you at 62. It's one thing to hold off on Social Security until full retirement age. But it's another thing to force yourself to wait three more years beyond that point -- especially if you can't quit your job until those monthly benefits start rolling in.
A tough decision to make
Clearly, it's not easy to land on the right filing age for Social Security. If you're struggling, you'll want to ask yourself how much money you need from the program to cover your expenses on a monthly basis, and also, what your goal is in terms of lifetime income.
You'll also need to consider your personal circumstances, including your health, savings, and job situation, to see which filing age is right for you. The more thought you put into the decision, the more likely you are to make the right one.
