Figuring out when to file for Social Security benefits is one of the most important retirement decisions you might make. That's because your filing age, coupled with your individual wage history, will determine what monthly benefit you get.
While you can claim Social Security benefits as early as age 62 or delay them until age 70 (or technically beyond), you may decide that age 67 is the optimal age for your to file. Here's why that could end up being a great decision.
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A nice middle-ground solution
Age 67 is full retirement age for people born in 1960 or later. And that's the age when you can collect your Social Security benefits without a reduction.
Of course, you're allowed to sign up for Social Security at any point in time once you turn 62. But for each month you file for benefits ahead of full retirement age, those monthly payments are reduced permanently.
You can also delay your Social Security claim past full retirement age for delayed retirement credits. Those credits are worth 8% for every year you hold off, and you can collect them until you turn 70.
Now, let's talk about the difference between claiming Social Security at 67 versus 62 or 70 using some actual numbers. The average monthly Social Security benefit among retired workers today is a little more than $2,000, so let's use $2,000 exactly as a nice, round number.
If you're eligible for $2,000 a month in Social Security at age 67, filing at 62 will mean getting $1,400 a month instead. Filing at 70 will mean getting $2,480 a month.
Clearly, there's a pretty huge gap between the lowest monthly benefit you're looking at in this scenario and the highest. But it's important to recognize that a very early claim or a very late claim could have some pretty notable drawbacks.
The drawbacks of filing for Social Security at 62 include:
- Reduced monthly benefits for life
- Smaller cost-of-living adjustments for life, since you're starting with a reduced benefit
- Smaller spousal benefits and survivor benefits for your partner if you're married
Of course, the upside of claiming Social Security at 62 is getting your money sooner. But it's kind of hard to overlook the drawbacks that come with that early access.
Meanwhile, the drawbacks of filing for Social Security at 70 include:
- Having to wait a long time -- and possibly work longer than you want -- to get your benefits
- Potentially locking in a smaller lifetime benefit if you don't live very long after age 70
On the plus side, of course, you'll get larger checks each month and potentially set your spouse up with more generous survivor benefits.
But when you consider these extremes, it's easy to make the case for filing for Social Security at 67. At 67:
- Your monthly benefits aren't reduced
- You don't have to wait so long to get them
- You've set your partner up with the largest spousal benefit possible
It's a win all around.
Think through your filing decision carefully
None of this is to say that filing for Social Security at 67 universally makes sense for everyone. The point, rather, is to recognize age 67 as a reasonable option for claiming benefits if you're struggling with that decision.
You should take different factors into account when deciding when to claim Social Security, including your:
- Health and life expectancy
- Savings level
- Retirement income needs
And also, if you're married, involve your spouse in that decision. But if you're having a hard time with it, you may come to the realization that age 67 is your best or most reasonable choice.
