Social Security can be claimed between 62 and 70. There are pros and cons to filing for benefits at different ages, so it can be difficult to figure out what’s best. In fact, my colleagues and I even have different ideas about when we’ll be starting our benefits.
Read on to find out how old we plan to be when we file for our first check — and to understand why we’ve each made these different choices for our Social Security strategies.
Maurie Backman: As someone who writes about Social Security a lot, I often advise seniors not to sign up for benefits at the earliest possible age of 62. The reason? Claiming them at that age will lead to a permanent reduction, and a substantial one, too.
But in spite of that, as of now, I’m leaning toward claiming benefits at 62, even though based on my full retirement age of 67, doing so would leave me with a 30% lower benefit on a monthly basis.
The reason? I’m doing my best to save aggressively for retirement.
Right now, I max out my solo 401(k), which allows me to contribute more than a traditional or Roth 401(k) would. I also routinely put money into a brokerage account that isn’t a dedicated retirement plan per se. But my goal is to leave my investments untouched and grow wealth in that account for the future.
I figure that if I manage to save enough money for retirement, I won’t have to worry about collecting a lower Social Security benefit, especially if my nest egg provides enough income to cover my basic expenses. I’m also hoping and planning to work in some capacity during retirement because frankly, I think I’d get really bored otherwise. So that, too, will hopefully allow me to generate some income and rely less heavily on Social Security.
People who enter retirement without a lot of savings should think twice about filing for Social Security early and slashing their benefits in the process. But I’m really doing my best to avoid that scenario, and if things go according to my plan, it really shouldn’t matter when I claim benefits. As such, I figure I might as well enjoy that money as soon as possible.
Katie Brockman: When I reach retirement age, I’m planning on claiming Social Security benefits at age 67.
Age 67 is my full retirement age (FRA), and it’s also the FRA for anyone born in 1960 or later. By claiming benefits at your FRA, you’ll receive the full benefit amount you’re entitled to based on your earnings history throughout your career.
I’m choosing to claim benefits at age 67 because it’s a happy medium between claiming early and delaying benefits.
When you claim Social Security before your FRA, your monthly checks will be reduced by up to 30%. That reduction is permanent, too, so your benefits won’t increase once you reach your FRA. If you were to delay benefits, you’d earn larger payments each month, but you may also need to work for several more years. For some people, putting off retirement until age 70 simply isn’t realistic.
Personally, I would rather spend more years in retirement in exchange for slightly smaller checks. By claiming at age 67, I will earn more in benefits each month than if I’d claimed at 62. However, I will be able to enjoy more time in retirement than if I had waited until age 70 to retire and claim benefits.
Because I don’t plan to wait until age 70 to claim benefits, I’m also working to build a robust retirement fund. I know I’ll receive less money per month by claiming at age 67, so I’ll need to be sure I have plenty of savings to fall back on during my senior years.
Choosing when to claim Social Security benefits is a highly personal decision, and it will depend on your financial situation, your lifestyle, and your individual preferences. But in my case, claiming at age 67 is a smart compromise.
My decision is driven by a desire to get the maximum amount of lifetime benefits possible. See, waiting until 70 will mean I’m past my full retirement age and able to earn delayed retirement credits. These will make my monthly checks larger. And if I outlive my projected life expectancy, it should also leave me with more benefits over time.
Social Security was theoretically designed so it doesn’t matter when you start getting your checks — you’re supposed to get the same amount of lifetime income. But that’s based on actuarial predictions of how long you’ll live. And life expectancies are growing longer, so odds are that most people will end up with more lifetime Social Security income if they wait.
I don’t plan to rely on Social Security as a major source of retirement income. But I have paid into the system my entire working life, and I want to maximize the benefits that I get from it. With close to six in 10 seniors ending up better off for having delayed, I figure the odds are in my favor that I’ll end up with more money if I put off my benefits claim.
Of course, this isn’t the right approach for everyone. You’ll need plenty of savings to live on until 70 if you anticipate delaying benefits. And my colleagues have made very good arguments for starting checks earlier. But, for me, it’s the strategy I hope to carry out once I become a senior.
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