If you've ever looked into when you should claim Social Security, you've probably come across a lot of conflicting information. Nearly a quarter of all seniors sign up at 62 -- the earliest possible claiming age -- but others say that's a bad idea, because doing so shrinks your checks by up to 30% for the rest of your life.
I lean more toward the latter camp. I hope to maximize my lifetime Social Security benefit by claiming at one of the program's least popular claiming ages: 70. That said, it's definitely not the best choice for everyone. You need to weigh the advantages against the drawbacks to decide if it's the right move for you.
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Why wait until 70 to claim Social Security?
You can technically claim Social Security at any point after you turn 62. Every month you delay, your checks grow by anywhere from 5/12 of 1% per month to 5/9 of 1% per month until you reach your full retirement age (FRA). That's the age when you qualify for your full benefit based on your work history. It's 67 for most workers today.
You can continue to delay benefits beyond this age, and your checks will grow by 2/3 of 1% per month until 70, when you qualify for your maximum benefit. The difference between claiming early and claiming at 70 can be pretty substantial. If you qualify for a $2,000 monthly benefit at 62 and have a FRA of 67, you could receive $3,543 per month by waiting until 70 to sign up.
Of course, it also means you'd get benefits for eight fewer years. So the upside to delaying Social Security depends a lot on how long you expect to live. I'm a reasonably healthy person and I expect to make it into my mid-80s or beyond. Longer life expectancies like these tend to favor delayed Social Security claims if you're trying to maximize your lifetime benefit.
The other major issue with delaying Social Security is that you have to cover your retirement costs entirely on your own until you're ready to sign up. But I think I'll be prepared to handle that because I'm saving regularly for retirement now. My job is also flexible enough that I can scale back my hours to transition into retirement slowly over time if I want to.
It's not set in stone yet, but if I succeed in waiting until 70 to claim Social Security, I'd join the rare group of less than 10% of Americans who wait until 70 or older to apply. I wouldn't recommend that to everyone, though.
Claiming early isn't always a bad thing
There are situations where claiming early absolutely makes more sense than delaying Social Security until 70. If you don't have enough savings to cover your living expenses without Social Security, then keeping yourself financially stable has to come before maximizing your lifetime benefit. If you'd rather not sign up right away at 62, you can always compromise by delaying Social Security until your FRA -- or even just for a few months -- to permanently boost your lifetime benefit.
You might also be better off claiming early if you don't expect to live much past your 70s. Generally speaking, you'll get a larger lifetime benefit by claiming early in this situation. However, you may prefer not to claim at all if you have family members who will depend on your Social Security survivor benefits after you're gone. Claiming Social Security early can permanently reduce the survivors' benefit available to them.
It's also possible that Social Security could change in the near future, and that might affect when you want to apply for benefits. The program's trust funds are less than a decade away from being depleted. The government needs to make changes to avoid significant benefit cuts. We don't know yet what these will look like or when they'll be implemented. But when they are, it'll be time for all workers to review and possibly revise their Social Security claiming strategy.
