It can be very tempting to sign up for Social Security at 62, which is when you're first allowed to start collecting your monthly benefits. But filing at 62 is a move you might regret -- namely because it will result in reduced benefits for life.
In fact, if you don't have a lot of retirement savings, then many financial experts would probably recommend waiting until full retirement age at the very least to sign up for Social Security. That age is 67 if you were born in 1960 or later.
Image source: Getty Images.
That way, you'll get to collect your monthly benefits without a reduction. And sitting tight could mean having an easier time paying your bills throughout your senior years.
But you also don't have to claim Social Security once you get to full retirement age. The Social Security Administration allows seniors to accumulate delayed retirement credits until the age of 70. Those credits could boost your Social Security checks by 8% per year. This means that if your full retirement age is 67, filing for Social Security at 70 results in a 24% increase to your monthly benefits for life.
Put another way, if you'd normally get $2,000 a month at full retirement age, signing up at 70 means locking in a $2,480 monthly payment instead. That's an extra $5,760 a year -- enough to give you more wiggle room in your budget, pay for unexpected home repairs or healthcare bills, or cover an annual vacation.
But there's a reason to consider claiming Social Security at 70 beyond just those boosted monthly checks for you. It's an option to think about strongly if you're married and have reason to believe your spouse will outlive you.
The less obvious upside of delaying Social Security
It's clear that delaying Social Security could result in more money for you. What you may not realize is that it could also result in more money for your spouse.
If you pass away before your spouse does, they'll be entitled to survivor benefits from Social Security after you're gone. And so the more money you collect from Social Security each month, the more your spouse stands to collect in survivor benefit form.
It could pay to consider delaying Social Security until age 70 if any of these situations apply:
- Your spouse doesn't have a lot of retirement savings, and your IRA or 401(k) isn't particularly robust, either.
- You're a lot older than your spouse.
- Your spouse is in much better health than you and may live a lot longer.
- You earned a lot more money during your career than your spouse did.
Remember, your spouse may be entitled to Social Security benefits of their own if they worked and accrued enough work credits to qualify. But if your average annual wage during your career was $110,000,and your spouse's was $75,000, it means you can expect a lot more money each month from Social Security off the bat. So if you're able to leave your spouse a larger survivor benefit, it's something your spouse may be extremely grateful for.
Look at the big picture
The decision to claim Social Security is not an easy one. Before you file for benefits, sit down with your spouse to talk through your options. You may also want to bring a financial advisor into the fold to help you weigh the pros and cons of different filing ages.
Of course, delaying Social Security until age 70 is not always an easy thing. It could mean having to work a few extra years, or retire from your main job but earn enough of a part-time living to keep those benefits on hold until they're maxed out.
But on top of the extra money for you, a claim at age 70 could mean extra money for your spouse once you're gone. And that's a gift you may want to push yourself to leave behind.
