The decision to claim Social Security is one you should contemplate a lot before moving forward. That’s because the filing age you decide on will dictate what your monthly retirement benefit looks like.
You’re entitled to your full Social Security benefit based on your wage history once you reach full retirement age, or FRA. That age is either 66, 67, or somewhere in between, depending on the year you were born.
But you can easily file for Social Security outside of FRA. The program allows you to start collecting benefits at age 62, and you can also delay your claim indefinitely if you so choose. However, financially speaking, there’s no incentive to postpone your filing beyond the age of 70, so that’s generally considered the latest age to claim Social Security — even though there’s no obligation to do so.
If you claim Social Security early, you’ll lock in a lower monthly benefit for life. Delay your filing, and that benefit will grow.
Filing for Social Security at age 70 could mean snagging a 24% to 32% boost to your monthly benefit, depending on your FRA. While that might seem like a good route to take, before you make that call, you’ll need to answer a difficult question.
How long do I think I’ll live?
Delaying your Social Security filing will result in a higher monthly benefit. But it won’t necessarily give you a higher lifetime benefit.
The reason? By waiting to file, you deny yourself several years of benefits in favor of a higher monthly paycheck. And that may work out for you just fine if you live a long life. If you don’t, though, you could end up short on Social Security income in the end.
That’s why you must ask yourself how long you realistically think you’re going to live before planning to file at age 70. If your health is great going into retirement, there’s a good chance you’ll end up living long enough for a delayed filing to make sure. The same holds true if older generations in your family lived well into their 80s or 90s.
But if you already have health problems, and your parents and grandparents largely passed away in their 70s, then delaying Social Security until the age of 70 may not make the most sense, financially speaking. That’s why you’ll have to be honest with yourself about your life expectancy.
Of course, in the absence of a crystal ball, you can’t be expected to predict your own lifespan. The best you can do is make an educated estimate. But it’s important to run through that exercise before moving forward with a Social Security filing strategy. Doing so could prevent you from making what ends up being a costly mistake.
Keep in mind that if you claim Social Security early and regret that decision, you can undo your filing and claim benefits again later on, assuming you act within a year and repay all of the money you received. But if you delay your filing, you can’t go back in time and undo that choice. So you’ll really need to make sure you’re comfortable holding off on benefits, and that you understand the risks involved.
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