Of all the retirement decisions you will have to make, reaching the Social Security filing age can be the most difficult. Although your benefits are calculated based on your salary during the 35 years of highest-paid earnings, the age at which you claim them will determine how much money you will receive each month.
You are entitled to your full monthly benefit based on your salary history once you reach full retirement age, or FRA. That age is 66, 67 or 66 and a certain number of months, depending on the year he was born.
But there are several years during which you can sign up for benefits. The earliest age to start collecting them is 62, and while there is technically no such thing as the latest age to file as you can sign up anytime from 62, 70 is the last age you will reap incentives associated with waiting.
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Specifically, for each year you delay in claiming Social Security before FRA, your benefits increase by 8%, but only up to age 70. Beyond that, they won’t grow, so there is no point in delaying any further. On the other hand, claiming benefits before FRA will result in a reduction. In the worst case scenario, you will lose 30% of your benefits by claiming them at 62 with an FRA of 67.
But having said all that, here is an interesting quirk about Social Security: The program is designed to pay you the same lifetime benefit (not monthly), regardless of when you first file. So it begs the question: Does it matter even when you sign up?
Your health is an important factor in your decision.
While it is true that Social Security will generally pay you the same total for life, regardless of the age at which it is presented, that also assumes that you will have an average useful life. But if you don’t, your filing age will have a big impact on the total benefits you receive.
If your health is poor, to the point that you don’t expect to live a long life, then applying for Social Security early will generally result in the highest lifetime benefit. On the other hand, waiting pays when your health is excellent and you are likely to outlive your peers.
Let’s run some numbers to explore more. Imagine that your FRA is 67 and you are entitled to $ 1,600 per month at that time. Filing at age 62 will reduce your monthly benefit to $ 1,120, while filing at age 70 will raise it to $ 1,984. If you end up living until age 73, which is not particularly old given today’s life expectancies, you will get $ 32,640 up front on your life by claiming benefits at age 62. On the other hand, if you end up living until age 93, which is beyond the average life expectancy for today’s older adults, you will get almost $ 48,400 in advance in lifetime benefits by waiting until age 70 to enroll in Social Security. .
As such, while you may hear that your Social Security filing age doesn’t matter much in theory, it does matter if you feel that your health will result in a considerably shorter or longer life span. And that’s why it’s worth thinking about your submission decision beforehand.
Of course, taking steps to improve your health could change your destiny, so before rushing to claim benefits early, think about how exercise, diet changes, and certain medications can change your perspective. A modest effort on your part can result in a scenario where instead of making sense to apply for benefits as soon as possible, it is better to claim them much later.
