Seniors who are entitled to Social Security retirement benefits can claim their first check between the ages of 62 and 70. The decision about exactly when to get benefits within this range is an important one because it plays a major role in determining your monthly income.
Specifically, anyone who claims their benefits before age 70 will not max out their potential payments. Retirees must wait until their full retirement age between 66 and four months and 67 to avoid shrinking their standard benefit amount by as much as 30%. And those who want the largest possible monthly income must wait until 70, as the standard benefit is increased each year until then.
While a bigger monthly check may seem like the ideal choice, there are three circumstances where filing for benefits right away is your best move rather than waiting for your payments to get bigger. You should likely claim Social Security ASAP if any of these apply to you.
1. You're concerned about your health
Since you can start Social Security at 62, waiting beyond that time to raise your monthly income comes at a cost. Between the ages of 62 and whenever you get your first benefit check, you will pass up potential payments.
Giving up this income makes sense only if the extra money you get after starting your payments makes up for all the money you passed up. If you delay the maximum time, until age 70, you must receive lots of extra checks — usually more than 10 years' worth of them — in order to cover the cost of the payments you didn't get. If you pass away before that happens, you've left money on the table.
As a result, if you're concerned about your health and aren't sure how long you'll actually be around to collect Social Security, you should claim payments ASAP. This way, you'll have your money in hand and won't have to worry about living long enough for future payments to make up for the income you gave up.
Now, there is one possible downside to this approach. If you're married and earned more than your spouse, you could shrink your spouse's survivor benefits by starting Social Security ahead of schedule. When you pass away, your partner essentially gets to keep the larger of the two benefits either of you were bringing in. If you substantially reduced your payments by starting checks at 62 and then you passed away shortly thereafter due to your poor health, your widow(er) would be left for the rest of retirement on just one Social Security check that's much smaller than it could potentially have been.
2. Your spouse is waiting for spousal benefits
You'll want to consider your spouse when deciding on a Social Security claiming strategy, as it makes sense for you and your partner to coordinate on when to claim benefits. That's the case because spousal benefits are available, and a person who claims them can get up to 50% of their spouse's standard benefit amount.
If your partner didn't earn much money or didn't work enough to qualify for Social Security on their own, they may end up with more money coming in each month if they claim spousal benefits on your work record instead of getting their own retirement checks. The catch is, they can't start getting their spousal benefits until you have claimed retirement benefits.
If your spouse is waiting to get Social Security payments, you may want to start your checks right away in order to open up the door for their benefits to begin.
3. Your savings are running short
If you are already retired and waiting to claim Social Security, you'll likely have to live on your savings in the interim. Since you won't have retirement benefits to supplement your savings, you could find yourself having to take more money out of your accounts than you should. If that happens and your principal balance starts to fall, it could jeopardize your ability to rely on your retirement investments for income in the future.
It's better to claim Social Security ASAP — even if that means getting a smaller benefit — than running your retirement accounts dry and taking the risk of having to live only on Social Security down the road, since your benefits aren't an adequate support source by themselves.
In any of these situations, claiming Social Security sooner rather than later could be crucial to your financial security. While it may be disappointing not to be able to wait to file for benefits to get bigger payments, it's important to recognize when delaying just isn't worth it.
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