If you are preparing for retirement, one of the most difficult issues you may face is when to file for Social Security. Benefit applications may be made as early as age 62. However, until you reach full retirement age (FRA), you are not eligible to receive your entire monthly benefit based on your individual earning history. And depending on the year you were born, that age is either 66, 67, or somewhere in the middle.
However, after you attain FRA, you are not required to register for benefits. Instead, delaying filing will allow you to accrue delayed retirement credits, which would increase your benefits by 8% annually.
The standard recommendation for the latest age to apply for Social Security is 70 since those credits will stop accruing once you reach that age. And if you do wait until you’re 70, your benefits may increase in a significant and beneficial manner.
Despite the advantages of filing for Social Security at age 70, you may wish to do so much earlier. If you do this, you could make less money each month, but not necessarily less overall.
You may not want to take this risk.
When you anticipate living a long life, delaying Social Security until age 70 often results in financial benefits. However, if you don’t, it often makes more financial sense to file for benefits earlier.
Keep in mind that filing early may result in receiving less money per month in Social Security benefits. However, it can also imply receiving more Social Security benefits over the course of your lifetime.
Let’s say your FRA is 67 and you are going to get a $1,700 monthly benefit. When you apply for Social Security at age 62, your payment will be reduced to $1,190; but, if you wait until age 70, your benefit would increase to $2,108.
Delaying your application until age 70 can allow you to collect more Social Security benefits overall if you live a long life. What if it doesn’t occur, though? What if you live to be 75 years old? In that situation, depending on your filing age, the total lifetime benefit you may expect is as follows:
- Age 62 — $185,640
- Age 67 — $163,200
- Age 70 — $126,480
And this is precisely why filing for Social Security far in advance of age 70 may be advantageous. Even while you can’t tell for sure, you could find yourself shorting yourself on benefits if you live a longer life. Therefore, filing early can really result in you having peace of mind.
Naturally, all of this is supposing that you’re single and just need to consider your personal requirements when determining whether to file for Social Security. If you’re married, it’s simple to argue that you should put off filing so that, should they outlast you by many years, your spouse would get a greater survivor’s benefit.
But otherwise, when choosing a Social Security filing age, don’t only focus on the amount of monthly income you’re considering. Instead, factor in lifetime earnings. When you do, you could conclude that your best and safest option is to file far before the age of 70.
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