There are a number of tough decisions you might end up having to make in the course of your retirement planning. Should you downsize out of your home to save money and reduce maintenance tasks? Should you tap your IRA or 401(k) immediately, or try to wait? And when should you sign up for Social Security?
That final question is an extremely important one. Although the monthly benefit you're entitled to from Social Security is based on your personal earnings history, your filing age plays a role in how much money you receive.
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In a nutshell:
- If you file at full retirement age, which is 67 for anyone born in 1960 or later, you get your monthly benefit without a reduction.
- If you file prior to full retirement age, which you can do starting at 62, your monthly benefit is permanently reduced.
- If you file after full retirement age, your monthly benefit increases until you reach age 70.
Both 62 and 70 tend to be popular Social Security claiming ages because they represent both ends of the filing spectrum. But here's why 67 may be the perfect filing age for you.
The upside of claiming Social Security at 67
A lot of people find themselves wondering what the perfect Social Security filing age is. And the answer is, it really depends on you.
Before you claim Social Security, you should think about your:
- Health
- Life expectancy
- Retirement income needs
- Savings balance
All of these factors should help you determine whether claiming Social Security early, late, or on time makes sense. But if you're still on the fence, 67 could be the perfect Social Security filing age because it's a middle-ground solution.
You won't face reduced benefits if you file at 67, but you won't get a boost (this assumes 67 is your full retirement age, of course). You won't get your money as early as possible, but you also won't have to wait as long.
Of course, you could really take the middle-ground approach and decide to claim Social Security at 66. Doing so would potentially reduce your monthly benefit slightly, but not necessarily by a huge amount.
Look at the big picture
Claiming Social Security at any given age over another doesn't just impact the amount of money you get. It might also dictate how that money gets used.
If you file for Social Security at 62, you might get smaller checks. But you might also receive that money at a time when you're able to visit the far-off destinations you've always wanted to see. If you file at 70, you might get larger checks, but you may not have the mobility to travel the way you want to.
So no matter what Social Security filing age you're leaning toward, look at the big picture and don't just fixate on the monetary value of your monthly benefit payments. That should make it easier to land on the right choice.
