When Should You Start Claiming Social Security? Find Out the Best Age for You!

Social Security is an important safety net for many retirees. But the question on everyone’s mind is: When should you start claiming your benefits?

There is no single best age for everyone, as the decision depends on many factors like your health, financial situation, and retirement goals. In this article, we’ll explore the key considerations that can help you make an informed decision about when to claim Social Security benefits.

When Can You Claim Social Security?

You can start claiming Social Security benefits as early as 62, but there are pros and cons to this decision. Your full retirement age (FRA), which is the age at which you can claim your full benefit, depends on your birth year. For most people today, the FRA is 67, but it may be 66 for those born between 1943 and 1954.

If you choose to claim Social Security early, your monthly benefit will be reduced. The earlier you claim, the smaller your payments will be. On the other hand, if you delay your claim, your monthly benefit will increase.

Source: CNBC

Impact of Your Claiming Age on Benefits

Two factors determine the amount you will receive from Social Security: your lifetime earnings and the age at which you claim your benefits.

• Lifetime earnings: The higher your lifetime earnings, the higher your Social Security benefits will be. Social Security calculates your benefits based on your 35 highest-earning years.
• Claiming age: The age at which you claim your benefits also plays a significant role. If you start claiming early, your monthly benefit is reduced. However, if you delay your claim, you will receive larger monthly payments.

Full Retirement Age and Early Claiming

If you claim Social Security before your full retirement age, your payments will be reduced. For example, if your full retirement age is 67 and you claim at 62, your monthly payments will be 30% smaller than what you would receive if you waited until age 67.

• Early claim reduction: If you claim at 62, your monthly benefits are reduced by 25% if your full retirement age is 66, or by 30% if your full retirement age is 67.
• Delaying benefits: If you delay claiming Social Security after your full retirement age, your payments will increase by 8% per year, until you reach age 70.

The key takeaway here is that the longer you wait to claim, the larger your monthly benefits will be. However, you must weigh this against the possibility of needing the money earlier and the fact that you will receive payments for fewer years if you wait longer.

When Is the Best Time to Claim?

While the decision of when to claim Social Security is personal, research has shown that for most people, the best time to claim is after age 65, and ideally, at age 70.

According to a study by the National Bureau of Economic Research (NBER), nearly all workers between the ages of 45 and 62 would benefit from postponing their claim until they reach age 70.

• The advantage of waiting: If you wait until age 70 to claim your Social Security benefits, you can increase your lifetime benefits by about 10.4%. For those who are financially disadvantaged, this could mean a 27.4% increase in spending power.
• Why most people don’t wait: Despite these benefits, only a small percentage of people actually wait until age 70 to claim. Many retirees claim early due to a lack of personal savings or because they need the money sooner.

The Cost of Claiming Early

Choosing to claim Social Security early can result in a significant loss of money in the long run. If you claim at 62 instead of waiting until your full retirement age, you could lose about $182,370 in lifetime spending power. This is a significant amount of money, especially if you don’t have other sources of income in retirement.

Source: Britannica

What Are the Risks of Delaying?

While waiting to claim Social Security has its benefits, it is important to understand the risks as well. If you delay your claim and face health issues or unforeseen expenses, you may not get as much from Social Security as you would have if you had claimed it earlier.

For some people, claiming Social Security at age 62 may be necessary to avoid financial struggles. If you don’t have sufficient savings or income from other sources, delaying your claim might not be an option.

Making the Right Decision for You

There is no one-size-fits-all answer when it comes to claiming Social Security. The best age for you to start claiming depends on your health, financial situation, and personal goals.

• If you are in good health and have sufficient savings, waiting until age 70 might be the best choice to maximize your benefits.
• If you need the money earlier, or if you have health concerns that may shorten your life expectancy, claiming earlier might be a better option.
• If you’re unsure, it might be wise to consult with a financial advisor who can help you assess your options and choose the best time to claim Social Security based on your unique situation.

Conclusion

Choosing the right time to claim Social Security benefits is a personal decision that requires careful thought and planning. By understanding the impact of claiming early or delaying your benefits, you can make an informed choice that will benefit you in the long run.

Remember, there is no universally “best” age to claim Social Security. Your decision should be based on your health, financial needs, and retirement goals.

This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.