When should you claim Social Security? That's the million-dollar question for most retirees.
Since many people need their Social Security payments to help make ends meet, it makes sense to try to get as much money from the retirement benefit program as you can. Your claiming choice affects how much money you end up with each month and over time, so it's a very important decision.
The good news is, there's some pretty clear data telling you when the right time is for most people.
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When can you claim Social Security?
The first thing to know is when exactly you can claim Social Security. Here are the rules:
- You can claim Social Security any time between 62 and 70 (you technically can claim later, but there's no benefit to doing so).
- If you claim before your full retirement age, benefits shrink by as much as 30% from your standard benefit.
- If you claim after FRA, benefits increase by as much as 24% compared to your standard benefit.
So an early claim means you get more payments over your lifetime. A later claim means you get fewer payments, but each one is larger.
What's the best age to claim Social Security?
In theory, it shouldn't matter when you claim Social Security. The early filing penalties and delayed retirement credits that increase or decrease your benefit were supposed to result in retirees getting the same amount of income, whether they claimed early or late.
That's no longer the case, though. Most people live longer than the life expectancies that actuaries considered when the system was created. It's now clear that the majority of retirees get more money if they wait -- ideally until 70 before getting their first check.
Data shows the best time to claim Social Security for most retirees
There have been multiple studies showing when to claim Social Security if you want to maximize your chances of getting the most benefits for life.
- 57% of retirees generate more wealth by claiming at 70, while just 6.5% get more lifetime wealth when claiming before 64, according to a United Income study from 2019. Early "suboptimal" claims have resulted in retirees missing $111,000 per household in lifetime wealth.
- 90% of workers aged 45 to 62 would generate more wealth with a claim at 70, with delayed claiming offering a 10.4% increase in lifetime spending for the typical worker, and a $182,370 increase in median household wealth, according to the National Bureau of Economic Research.
What should you do about your Social Security claim?
The data makes it pretty obvious that your best bet is claiming Social Security at 70. Of course, this means you need to either work until 70 or generate enough investment income in your retirement plans to support yourself until then.
Contributing to your plans throughout your career and investing wisely is the smartest thing you can do to make sure you have the money you need as a retiree.
