The idea of a larger monthly benefit is nice. But I think filing earlier might be a better choice for me.
Social Security is a surprisingly flexible program in that you get a choice as to when to sign up. The earliest age you can claim benefits is 62. But you’re not eligible for your complete monthly benefit based on your individual wage history until full retirement age arrives. That age is 67 if you were born in 1960 or later.
You can also snag a much higher monthly benefit by delaying your Social Security claim until age 70. If your full retirement age is 67, filing at 70 means raising your monthly benefit by 24% — for life.
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Unfortunately, you can’t grow your benefit beyond the age of 70, which is why it’s generally considered the latest age to sign up for Social Security. This isn’t to say that you can’t hold off on benefits until 71 or 72 — but why would you? There’s no financial upside whatsoever.
I used to be convinced that I’d claim Social Security at 70 to lock in the highest monthly benefit possible. But more recently, I’ve changed my tune. And I’m now convinced that claiming benefits at 70 is a mistake — at least for me.
Why I’m no longer a fan of filing at 70
Claiming Social Security at age 70 might give you the highest monthly benefit you’re eligible for. But it won’t necessarily result in the highest lifetime benefit.
I have friends whose parents are alive and well into their mid-80s. But I also have friends whose parents passed in their early 70s.
Someone who delays Social Security until age 70 and passes at 73 won’t come out ahead financially in their lifetime by waiting. And since no one can predict their own longevity, filing earlier seems like a safer bet to me.
But that’s not the only reason I’m no longer inclined to claim Social Security at 70. The other reason is that I’m pushing myself to save aggressively for retirement so that any money I collect from Social Security is fun money — income I can use for leisure, charitable donations, or silly home décor that puts a smile on my face.
I don’t want to wait until 70 to get my hands on that money. If I decide that I’m going to use my benefits to pay for two vacations per year, I’d rather take those vacations at 62 than eight years later. Who knows what a difference that stretch of time could make in my health?
It’s a personal choice
While I’m now leaning toward an earlier Social Security filing than I previously thought, there’s a big reason for this shift in thinking. In the past five years, I’ve really done a solid job of boosting my nest egg.
I also made the decision a few years ago not to upsize my home, but instead, stay put and free up more money for long-term savings and other priorities. Because of this, I’ve saved beyond the amount I would’ve otherwise expected to.
And as such, I can say there’s a good chance I won’t have to be reliant on Social Security in retirement to pay for essentials like shelter and groceries. So in that case, I can afford a hit to my monthly benefits. And I don’t necessarily have to push myself to wait until 70 for a boosted benefit.
But your situation may be very different. So I’d caution you to consider your personal circumstances carefully before adopting the same strategy as me.
If you’re nearing retirement with a pretty small nest egg, then I wouldn’t suggest claiming Social Security before full retirement age unless you have health issues that you feel are likely to shorten your lifespan. Rather, I’d say try to wait until full retirement age, or, better yet, age 70, to make up for those limited savings.
Also, it may be that your health is excellent and that your parents and grandparents lived (or are living) into their late 90s. In that case, you’re likely to walk away with more lifetime Social Security income by waiting until 70 to sign up.
But even in that situation, if you’re fine financially without Social Security and simply want your money sooner, take it. Those benefits represent money you’ve earned. And there’s nothing wrong with claiming them as soon as you’re able to.
In fact, another reason I used to say I’d claim Social Security at 70 was guilt. I felt it would be financially irresponsible to not lock in the highest monthly benefit possible. But I’ve realized there’s more to life — and retirement — than snagging the maximum monthly benefit you’re eligible for. And if filing early can lead to a higher quality retirement overall, then that’s absolutely the right thing if you can afford it.