One of the toughest decisions you might have to make in the context of your retirement is figuring out when to claim Social Security. For that choice, you have multiple options.
In a nutshell, once you turn 62, you'll be eligible to sign up for Social Security whenever you want. However, you won't get your complete monthly benefit, based on your personal wage history, until full retirement age (FRA) arrives. That age is 67 if you were born in 1960 or later.
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You can also delay your Social Security claim past FRA if you so choose. And if you're thinking -- "Why on earth would I do that?" -- you should know that for each year you postpone your filing, up until age 70, your monthly benefit will get a permanent 8% boost.
You may decide to delay your Social Security claim until 70 to snag the highest benefit you can. While that might seem like your savviest financial route, it might backfire on you for one big reason.
You may not come out ahead financially in the long run
Claiming Social Security at age 70 will give you a larger monthly benefit than an earlier filing. But will it give you a larger lifetime benefit? That's questionable.
Delaying Social Security until age 70 means taking a risk. If you don't live very long beyond that point, you might get less total money from Social Security than if you claimed benefits earlier.
Imagine you're eligible for $2,000 a month from Social Security at an FRA of 67. If you file for benefits at 70, you'll get $2,480, instead.
In this scenario, you'd be up $480 per month, which is great -- unless you only live until age 76. In that case, waiting until 70 to take benefits means getting $37,440 less Social Security than claiming benefits at 67.
On the flip side, if you live until 90, filing at age 70 will give you $43,200 more in Social Security. So it's a tough call to make.
Use your health and family history as a starting point
Of course, you don't have a crystal ball, so you can't predict with any degree of certainty how long you'll live. Your best bet for claiming Social Security, then, is to assess your health and consider your family history.
If your health is great and your parents are still alive well into their 90s, you may decide that claiming Social Security at 70 makes sense for you. But if you already have health problems and your parents passed away in their 70s, you may not want to take the risk of waiting to file for benefits until you turn 70.
Ultimately, your Social Security claim is a bit of a gamble. Unfortunately, there's no getting around that. But think carefully before deciding that age 70 is automatically the best age to file for Social Security due to the higher monthly payday. You don't want to delay your claim and then kick yourself for doing so after the fact.
