As you’re preparing for retirement, one of the most important decisions you’ll make is what age to begin claiming Social Security benefits. The earliest you can file for benefits is age 62. That’s also the most popular age to begin claiming, with around 35% of men and nearly 40% of women taking benefits at 62, according to a report from the Bipartisan Policy Center.
There’s not necessarily a right or wrong age to file for Social Security, but there are advantages and disadvantages. There are a couple of scenarios where you may want to claim as early as possible, and one situation where you might be better off waiting a few years.
When to consider claiming at 62
1. You want to retire early. You don’t necessarily have to begin claiming benefits as soon as you retire, but the two often go together. If you want to get a jump-start on retirement, then, it can be helpful to start taking Social Security early.
It’s possible to retire early but delay Social Security. However, you’d need to rely on your savings or other sources of income until you begin receiving benefits. In many cases, draining your retirement fund too soon isn’t worth the boost in benefits you’d receive by waiting.
Similarly, if you’re forced into an early retirement (due to job loss, health issues, etc.), claiming early can provide an additional source of income. If money is tight and your savings are falling short, Social Security can go a long way.
2. You might have a shorter-than-average life span: In theory, the total amount you receive in benefits should be roughly the same, regardless of what age you file. If you claim early, you’ll receive smaller checks each month, but more of them over a lifetime. By waiting to claim, you’ll earn larger payments, but fewer of them in total.
The point at which the amount you’d receive by delaying benefits overtakes the amount you’d collect by filing early is called your “breakeven age,” and for most adults, it will be somewhere in your late 70s or early 80s.
If you expect to live well into your 80s or beyond, you could receive more over a lifetime if you delay Social Security. But if you have reason to believe you may not live until your late 70s, you could be better off claiming as early as possible to maximize your benefits.
When you might want to wait
1. You want to maximize your monthly income. One of the best reasons to consider delaying Social Security is to maximize your monthly income. While the amount you receive over a lifetime should be roughly equal, regardless of when you claim, your monthly benefit amount will depend largely on the age at which you file.
If you claim as early as possible at age 62, your benefit amount will be reduced by up to 30%. But if you delay benefits (up to age 70), you’ll receive your full benefit amount (or the amount you’ll collect by claiming at your full retirement age) plus up to 32% extra each month.
These benefit adjustments are usually permanent, too. Once you begin claiming, your benefit amount will be locked in for the rest of your life (save for annual cost-of-living adjustments). So if you delay benefits, you could receive hundreds of dollars more per month for the rest of your retirement.
Deciding at what age to file for Social Security isn’t easy, but it could have a significant effect on your retirement. By making this decision carefully, you can head into your senior years as prepared as possible.
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