You can claim Social Security as soon as you turn 62, but waiting longer before tapping your benefits can often make sense financially in the long run.
Waiting until full retirement age, which is 67 if you were born in 1960 or later, allows you to receive your full benefits. However, the best age for you to claim your Social Security benefits will depend on factors such as your specific financial situation and when your spouse is claiming. Consider the answers to these three questions to help you decide when you should claim.
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1. Do I need the money now, or can I afford to wait?
Even though you reach full retirement at 67, you can still wait a little longer to maximize your Social Security checks. You will receive the maximum payout if you claim Social Security at 70. While claiming at 67 offers an immediate income boost, waiting until 70 results in higher monthly benefits.
Anyone who does not have a pressing need for Social Security may want to delay claiming their benefits. If you are 67, you only have to wait another three years before you can claim the maximum amount. Some people bridge those years with portfolio withdrawals, a part-time job and cost-cutting. However, it may be worth taking out Social Security at full retirement age if you need more income to cover your essentials.
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2. How long do I realistically expect to rely on this benefit?
Social Security is designed to provide financial help to retirees once they’re no longer working. Some people only end up using Social Security for 10 years, while others live deep into their 90s and end up using it for multiple decades.
People who have a family history of poor health conditions and shorter lifespans may want to consider tapping into Social Security earlier. Individuals who have high longevity in their family history and are healthy, on the other hand, may want to wait so they can receive higher monthly benefits later in life.
3. How will my decision affect my spouse, taxes and work plans?
If you’re married, you also need to consider when your spouse plans to take their Social Security. If one of you passes away before the other, the surviving spouse will either receive their current Social Security benefit or their spouse’s, depending on which is higher. Therefore, if you were the higher earner, it may make sense to delay claiming benefits for as long as possible.
Claiming Social Security can also trigger more taxes if you or your spouse is still working. It also increases your taxable income if you withdraw from a traditional retirement account while collecting Social Security.
Some couples choose to have the higher-earning spouse hold off on claiming Social Security benefits while the lower-earning spouse claims earlier. Consider speaking with a financial planner or tax professional if you have a more complex financial setup.
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