If you were to ask 100 financial experts the best time to claim Social Security, the vast majority would suggest to wait until 70. Ultimately, it's all about life expectancy.
According to the Centers for Disease Control and Prevention, if you live to age 65, you probably have more in the tank. At age 65, the life expectancy for women is 85.8 years, and for men it's 83.4.
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The common school of thought is that the longer you wait to claim Social Security benefits, the larger your benefit will be into your 80s (and beyond). That's because benefits increase by 8% for each year you wait after your full retirement age (FRA), up to age 70.
It all depends on you
While it's easy to throw out a single age as though everyone should adhere to it, the "perfect" age to retire depends entirely upon your situation. Before determining when you want to claim Social Security benefits, ask yourself the following questions.
How much of my pre-retirement income do I expect Social Security to cover?
Social Security is designed to replace approximately 40% of your pre-retirement income. For example, if you regularly earn $4,000 per month, Social Security should replace around $1,600 of it.
If it doesn't look like you're going to have other sources of income in retirement, working until age 70 may make sense. Consider this: If your Social Security benefits at FRA are scheduled to be $2,000 per month, waiting until age 70 will increase that amount by 24%, to $2,480.
Will I be the only person in my household receiving Social Security?
Let's say you're the primary breadwinner and your spouse plans to claim Social Security spousal benefits. As your spouse, they're eligible for up to 50% of your benefit at FRA. If you're receiving $2,000, they'll receive $1,000.
There's one thing to keep in mind, though. If one of you dies before the other, the lower amount will be eliminated, leaving the surviving spouse with $2,000 a month.
How's my health?
The best time to claim Social Security may require an entirely different calculus if you're in poor health and not expected to live a long life. If that's the case, it may make more sense to make a claim earlier than age 70.
How much money do I have outside of Social Security?
Do you have a retirement fund you plan to draw from each month? Do you have other streams of income, such as rental property, a small business, an annuity, or royalties? If your financial plans for retirement have always involved you receiving the bulk of your monthly income from sources other than Social Security, it may not matter as much when you make your claim.
Like most things in finance, the answer is nuanced. It depends entirely on you and your situation. At the end of the day, it doesn't matter what the experts say. What matters is ensuring you'll have enough money to last through your senior years.
