The age at which you apply for Social Security is a significant retirement milestone since it affects your monthly income for the rest of your life.
The earliest you may apply for benefits is at the age of 62, and it’s also the most popular among retirees. According to a 2020 analysis from the Bipartisan Policy Center, approximately 35% of males and close to 40% of women claim Social Security at the age of 62.
According to the survey, there are significant benefits to waiting until you are 70 years old, even if only about 10% of older Americans do so. You’ll earn significantly larger monthly checks if you delay benefits until you’re 70.
The age at which you file a claim is mostly determined by your personal circumstances, however there are several situations in which claiming sooner or later in life may be preferable.
AT THE AGE OF 62, WHEN IS IT BEST TO CLAIM
Your Social Security payouts will be reduced by up to 30% if you claim before reaching full retirement age (FRA). Furthermore, once you reach your FRA, your benefit amount will not change, thus your benefits will be fixed for the rest of your life.
Nonetheless, despite the smaller checks, there are several situations where filing early pays off. You may choose to claim early and get a head start on retirement if you have a sizable retirement savings, for example. Although you’ll get less money from Social Security each month, it’s a minor price to pay to be able to retire sooner.
When selecting when to file, it’s also a good idea to think about your overall health and lifespan. If you’re dealing with health concerns or have reason to suspect you won’t live as long as the normal person, filing early may allow you to take use of your benefits sooner.
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WHEN IT’S BETTER TO WAIT UNTIL YOU’RE 70 YEARS OLD
The main benefit of deferring benefits until you’re 70 is that you’ll get much higher monthly amounts.
Assume you have a FRA of 67 years old and that claiming at that age will net you $1,500 per month. Your payments would be lowered by 30% if you applied at the age of 62, leaving you with $1,050 per month.
If you wait until you’re 70 to file, though, you’ll get your full benefit amount plus an additional 24%. This works out to $1,860 every month, which is roughly double what you’d get if you filed at 62.
Waiting until you’re 70 to claim Social Security is a sensible decision if you want to maximise your monthly payout. If you plan to live a longer life than the average, you may choose to defer benefits. Those larger checks could come in handy if your savings run out later in life.
WHICH OF THE TWO OPTIONS IS BEST FOR YOU?
There is no right or wrong answer when it comes to when you file for Social Security. You can determine the optimal retirement age by taking into account your financial circumstances, your health and expected lifetime, and your retirement preferences.