The $850 Social Security Decision You Need to Make Carefully
Choosing when to file for Social Security can shift your monthly income by a surprisingly wide margin, and the age you pick could shape your retirement finances for decades. Before you sign up, there are a few critical factors worth…
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If there’s one income source you can bank on to carry you through retirement, it’s Social Security. Your savings could unfortunately run out over time. But Social Security is guaranteed to send you a monthly check for life. For this reason, it’s important to claim your benefits at the right time.
See, your Social Security benefits are determined by your 35 highest-paid years in the workforce. But your claiming age also plays a role in how much money you get.
You have a range of filing ages you can choose from to start Social Security. But the difference between the low end and the high end could be more significant than you’d think.
The gap between 62 and 70 is substantial
There are many Social Security filing ages you can choose from, but here are three key ones to know:
- Age 62 is the soonest you can sign up for benefits, but you’ll be looking at a reduction.
- Age 67 is full retirement age (FRA) for people born in 1960 or later, and it’s when you can claim your Social Security benefits without a reduction.
- Age 70 is when you stop getting credit for a delayed claim, which is why it’s typically considered the latest age to file for Social Security.
For some context, if your FRA is 67 and you claim Social Security at 62, you’ll be looking at a 30% reduction in your monthly checks. If you delay until age 70, you’ll boost your monthly benefits by 24%.
If you want to know what that means in practice, let’s take a look at the average monthly Social Security benefit today at 62 versus 70.
The average age 62 benefit is $1,424.40 a month. The average age 70 benefit is 2,274.68 per month. The difference between the two is about $850 per month, or roughly $10,200 per year.
Now to be clear, this doesn’t mean the difference between your monthly benefit at 62 versus 70 will be $850. That figure represents the difference between what the typical 62-year-old today is collecting versus the typical 70-year-old.
It’s also worth noting that the typical 70-year-old getting Social Security today may not have filed at 70. What this means, though, is that the difference between you signing up for Social Security at 62 versus 70 could be quite large. So it’s important to consider that difference carefully when making your decision.
Landing on the right filing age
Of course, when it comes to choosing a Social Security filing age, the exact benefit you’d get at one age versus another isn’t the only thing to take into account. You should also consider lifetime benefits
If you live an average lifespan, there’s a good chance Social Security will pay you around the same total regardless of whether you file early versus late. But if you don’t expect to live a long life, claiming at 62 could leave you with a larger lifetime Social Security check. And if you have great health and think you’ll live well into your 80s or beyond, filing at 70 could lead to a larger lifetime benefit.
The point, though, is to understand that the difference in your monthly payments between claiming benefits at 62 versus 70 could be a big number. So before you file, get an estimate of your monthly benefit at SSA.gov so you can see exactly what the difference is. Then use that information to arrive at a decision that makes sense for you financially.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
