There's a reason older Americans are often encouraged to claim Social Security as late as possible. Waiting until age 70 to take benefits means scoring boosted monthly checks for life.
Specifically, you're entitled to your complete monthly Social Security benefits based on your wage history once you reach full retirement age. And that age is 67 for anyone born in 1960 or later.
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But for each year you delay your claim past full retirement age, your Social Security benefits grow 8%. The reason 70 is generally referred to as the latest age to sign up for Social Security is that there's no financial incentive to wait beyond that point.
Now I happen to think that filing for Social Security at 70 is a smart move for some people. But it's not what I want to do. Here's why I plan to take Social Security much earlier.
1. I don't want the money to go to waste
My goal for my Social Security checks is to use the money for leisure and hobbies and rely on my retirement savings to cover my basic bills. For this reason, I'd rather get that money sooner.
It's not a given that for each year you age, your mobility will wane and your health will worsen. But I'd rather not take that chance.
In fact, the earliest age you can claim Social Security is 62. Signing up then, which, for me, would be five years ahead of full retirement age, could reduce my monthly benefits by 30%.
But if I'm in good health at age 62, I want to capitalize on that. I don't want to force myself to wait eight more years to claim benefits and run the risk of not being able to enjoy them to the fullest.
2. I can (hopefully) afford not to maximize my benefits
I have a number of friends who are within 10 to 15 years of retirement with no money saved whatsoever. And while I wouldn't call that a lost cause, at this point, the likelihood of them retiring with a substantial sum of money is pretty small.
But I've been funding a retirement account since my early 20s. (And without revealing my current age, I'll say I've been making contributions for many years.) Because of that, my hope is to be able to get most of my retirement income from savings, allowing me to forgo boosted Social Security checks.
It's a very personal decision
I clearly have my reasons for wanting to claim Social Security long before age 70. But do recognize that your situation may be different from mine.
If you find yourself with $40,000 in retirement savings come age 62, it's probably not a good idea to claim Social Security then and reduce your monthly checks. In that situation, I'd generally recommend delaying your claim until age 70, provided you're in reasonably good health.
The point, therefore, is to think about how reliant you expect to be on Social Security for retirement income before making your filing decision. But also know that in some situations, claiming benefits well before age 70 could be a wise choice, even if it means giving up some of that guaranteed monthly income.
