Will You Regret Waiting to Claim Social Security?

Waiting to claim your Social Security benefits can pay off big time under the right circumstances. In fact, for a typical retiree on track to get the average benefit, delaying a claim from age 62 to age 70 could result in a monthly income that’s almost $900 per month higher.

But while you may see more money in your monthly checks if you put off starting them, that doesn’t mean a delayed Social Security claim is the right choice in every circumstance. In fact, there are times you could come to regret not getting your benefits as soon as you become eligible for them at age 62.

Here are a few situations where this could happen to you.

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1. If you don’t live long enough to make up for missed benefits

One of the biggest reasons you could come to regret claiming Social Security late is if you end up passing away before breaking even.

Waiting to claim benefits means you get more money each month — eventually. But in the meantime, you get nothing when you could have been receiving thousands of dollars per year in Social Security income. Say, for example, you’d have been on track for a standard benefit of $1,500 at a full retirement age of 67 and you’re deciding between starting payments at 62 and age 70.

At age 62, your monthly payments would be reduced by 30% because you’d be hit with five years of early filing penalties. You’d end up with $1,050 per month. If you waited until 70, your monthly payments would increase by 24% due to three years of delayed retirement credits earned by waiting until after full retirement age to get your first payment. You’d have $1,860 in monthly Social Security income — $810 per month more.

While an extra $810 per month sounds great, you can’t forget that you’ve given up $1,050 per month for eight years and missed out on $100,800 in payments. It would take 124.4 months or 10.37 years just to break even for every dollar you passed up. Unless you lived beyond 80.37 years, you’d find yourself with less Social Security income over the course of your life — and could be left regretting passing up the chance to get that $100,800 in payments.

2. If your health status declines and you can’t enjoy your money

Unfortunately, there’s another reason you may come to wish you’d claimed Social Security earlier. Your health status may decline as you age.

If you end up working during some of your last good years because you need a paycheck to enable a delayed Social Security benefits claim, you may resent the fact you gave up the chance to enjoy your freedom. And if you find yourself too sick to travel or even enjoy spending the extra money once you’ve finally claimed your benefits, you may be left feeling like you’d have been better off accepting smaller payments while you could still spend the money on something fun.

Of course, the extra money in your checks could come in handy to help cover health expenses. But that may be small comfort if you’re flush with additional cash you can’t use to live out any of your retirement dreams.

It’s important to consider these two possible outcomes if you delay your Social Security claim so you can make an informed choice about whether you’d rather get your hands on your benefits ASAP, or put off your first payment and hope all goes well as you age.

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