The age at which you begin claiming Social Security will affect your monthly income for the rest of your life, so it's important to take this decision seriously. You generally only get one chance to file for benefits, and if you regret your choice, there's not much you can do about it.
But it can be tough to decide on the right age to file. There's no single correct time to begin taking benefits, and the right age for you will depend on your retirement goals, finances, overall health, and other factors.
That said, a comprehensive study shows that for the majority of retirees, there's an ideal and less-than-ideal age to take benefits. Here's what the data says about the worst time to claim -- and how much money you could be missing out on.
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How your age affects your benefits
First, it's important to understand exactly how your age will affect your monthly payments. You can file for Social Security as early as age 62 or delay benefits to earn larger checks each month. While there's no limit to how long you can wait, you'll only receive higher payments up to age 70 -- so there's no financial incentive to delay past that age.
To receive 100% of the benefit you qualify for based on your earnings history, you'll need to file at your full retirement age (FRA) -- which is age 67 for everyone born in 1960 or later. By claiming at 62, your benefits will be reduced by up to 30%. Wait until age 70, and you'll receive your full benefit plus a bonus of 24% or more.
One common misconception is that if you file early, your benefits will go up once you reach your FRA. However, once you file, your benefit is generally permanent. If you claim early, expect to receive smaller payments for the rest of your life.
The worst (and best) ages to claim Social Security
In 2019, researchers at United Income studied retirees' claiming decisions and how those choices affected their lifetime income. They then used that data to determine how many people claimed at the "optimal" age to maximize their income throughout retirement.
According to the data, claiming before age 64 was optimal for only 6.5% of retirees -- suggesting that ages 62 and 63 are the least ideal for maximizing lifetime income. Researchers also found that 57% of study participants could have earned more over a lifetime by waiting until age 70 to file for benefits.
Furthermore, the study revealed that the average retired household will miss out on around $111,000 worth of lifetime income by claiming at the sub-optimal age. For many older adults, then, filing at the "wrong" age could set them up for a financially inadequate retirement.
When claiming early is worth it
One important caveat with this research is that it only considers the financial side of Social Security. While finances are an important piece of the puzzle, they're not the only factor that will influence your claiming decision.
For example, your health and life expectancy can affect the age at which you claim. If you end up living a shorter-than-average life, you could collect more in total by claiming benefits early. Also, filing early can give you more time to enjoy your money. If you don't live well into your 70s or beyond, you may get more out of your retirement by filing as early as possible.
Claiming early can also be smart if you have plenty of savings or don't plan to rely heavily on Social Security in retirement. Filing sooner can make early retirement more affordable -- just be sure you know how your age will affect your benefit amount before you make your decision.
The right age to take Social Security will depend on your situation, so there's not necessarily a best or worst time to file. Delaying benefits could be best from a financial perspective, but by considering your goals and preferences, you can make the right decision for your retirement.
