You’ve probably heard a lot of people warning against claiming Social Security at 62, and there’s a good reason for that. Starting benefits right away permanently reduces your monthly checks. That could result in a smaller lifetime benefit for some people, but for others, it’s actually the smart move.
Below, we’ll look at one situation where you absolutely ought to sign up for benefits right away. But first, it’s important to have a basic understanding of how your starting age affects your Social Security checks.
Why your age matters for Social Security
The Social Security Administration assigns everyone a full retirement age (FRA) based on the year they were born. For most people today, their FRA is somewhere between 66 and 67. You must wait until this age to sign up if you want the full benefit you’re entitled to based on your work history.
It’s possible to claim as early as 62, but the government reduces your checks for every month that you claim before your FRA. Starting as soon as possible means you’ll get only 70% of your full benefit per check if your FRA is 67 or 75% if your FRA is 66.
On the flip side, every month you delay benefits increases your checks slightly until you reach your maximum benefit at age 70. This is 124% of your full benefit per check if your FRA is 67 or 132% if your FRA is 66.
To put this in perspective, if you qualify for the $1,560 average Social Security check at your FRA of 67, you’d get only $1,092 per month if you signed up at 62. But you’d get $1,934 per month if you waited until 70.
How long will you claim benefits?
When deciding on the best age to sign up for Social Security benefits, you have to take your life expectancy into account. This affects how many checks you’ll receive and, consequently, how much you’ll get from the program overall.
For those who believe they’ll live into their 80s or beyond, delaying benefits as long as possible is usually the best option. Returning to our example of a $1,560 monthly benefit claimed at 67, you’d collect about $336,960 total if you claimed at your FRA and lived until 85. By contrast, you’d get only $301,392 if you signed up right away at 62 and claimed until 85. But you’d come out the best if you delayed benefits until 70. Though you’d claim benefits for the shortest period — 15 years — you’d receive $348,120 from the program during that time.
That’s a compelling reason to delay benefits if you believe you’ll live long enough. But things look different for those with shorter life expectancies. If you live only to 70 due to a health condition, you’d be better off signing up right away at 62. Claiming a $1,092 monthly check for eight years would net you a lifetime benefit of $104,832, whereas someone who waited to claim their full benefit of $1,560 at 67 would get only $56,160, and someone who planned to start at 70 wouldn’t get anything from the program at all.
No one knows exactly how long they’ll live, so you have to make an educated guess. If you have a personal or family health history of serious illness, you may want to err on the side of caution rather than signing up late. On the other hand, if you’re in good health and you can afford to delay benefits, doing so will probably get you more money overall.
Now it’s your turn
The easiest way to determine when you ought to sign up for benefits is to use the benefit calculator in a my Social Security account. This tool uses data from the IRS showing how much money you’ve paid in Social Security taxes over the years to give you an accurate idea of what your checks might be at various starting ages. You can also see how changes to your income over your working years could affect your benefit.
Write down your estimated monthly Social Security benefit for various starting ages. Then multiply that number by 12 to get your estimated annual benefit. Finally, multiply each of your annual benefits by the number of years you expect to receive checks. For example, a $1,560 check claimed every month for a year would give you an annual benefit of $18,720. If you claimed that annual benefit for 18 years from ages 67 to 85, you’d have a lifetime benefit of $336,960.
Do this for all the starting ages you’re considering until you find the one that offers you the largest benefit overall. Ideally, you can wait until this age to sign up, but you also have to weigh how this timing will affect your finances. Explore a few different scenarios until you find the one that works best for you.
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