Social Security is important to many older Americans. Once you retire, you’ll probably need those benefits to pay your living expenses. For this reason, it’s important to file for Social Security at the right time.
But that means different things to different people. It’s important to recognize that choosing the wrong filing age could cost you a lot of money in benefits.
Claiming Social Security: your range of choices
You have a wide range of ages to claim Social Security.
The earliest age to take benefits is 62. However, you won’t receive your benefits without a reduction if you don’t wait until full retirement age (FRA). Your FRA is 67 if you were born in 1960 or any year later.
If you delay Social Security past your FRA, your benefits will increase by 8% per year until you turn 70. If you file at 62, your benefits will be reduced by about 30% compared to waiting until 67.
You can of course file for Social Security benefits at any other age within this range. For example, you could file at 63 or 68. However, 62, 67, and 70 tend to be popular filing ages.
Your health matters a lot
It’s common for retirees to wonder what the right Social Security claiming age is. But the truth is that there’s no universal answer, and that any of the ages above could end up costing you money.
The problem with filing for Social Security at 62 is pretty obvious. You’ll reduce your benefits on a monthly basis. But filing later isn’t necessarily a solution to that problem.
Claiming Social Security at 67 or 70 may give you larger benefits each month. But if you don’t end up living very long, you could end up with a smaller lifetime benefit by not filing for Social Security sooner. For this reason, it’s very important to think about how healthy you are as you become eligible for Social Security.
If your health is in very good shape at 62, it could pay to wait. If you file for Social Security at 67 or 70 and end up living until your late 80s or early 90s, you could easily end up with more lifetime income by not claiming benefits early.
On the other hand, if your health is poor as you become eligible for Social Security, you may want to think about taking benefits as soon as you can. If you only end up living until your early or mid-70s, you could end up with a larger lifetime Social Security benefit by filing at 62.
To put it another way, claiming Social Security at 62 could cost you thousands in your lifetime if you live a long life. But waiting could also cost you thousands if you don’t live a long life.
Your family history should also play a part in that decision.
If you have parents who lived until their late 80s or 90s and your health is good in your early 60s, it’s an indication that you may have a long life ahead of you. If your parents passed away in their mid-70s and you’re already having big health problems in your early 60, you may want to assume less longevity and take Social Security early to avoid losing out.
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