One of the most important financial decisions for retirement is when to start collecting Social Security benefits. While your monthly payment is primarily based on your earnings history, the age you choose to claim also has a significant impact on how much you’ll receive.
You can begin receiving Social Security as early as age 62. However, if you were born in 1960 or later, your full retirement age (FRA) is 67, which is when you’re eligible for your full, unreduced benefit.
You also have the option to delay benefits beyond your FRA. For each year you wait—up to age 70—your monthly benefit increases by about 8%. While this can be a smart financial move for many, it’s not always the best choice for everyone. Here are three reasons why claiming earlier might make more sense for you.
1. Your Job is Negatively Affecting Your Well-being
Delaying benefits until 70 often assumes you’ll keep working until then. But if your current job is causing you stress or physical strain, it might not be worth the wait. Whether it’s a demanding boss, an overwhelming workload, or a loss of satisfaction in your work, staying on the job could take a toll on your mental and physical health.
If you’re nearing full retirement age and your job is making you miserable, stepping back earlier—even with a reduced Social Security benefit—might improve your quality of life and overall well-being.
2. A Decline in Health Changes Your Outlook
Even if you’ve enjoyed good health for most of your life, unexpected medical issues can arise. If your health has recently declined, it might make sense to reconsider your Social Security strategy.
Delaying benefits usually makes sense if you expect to live into your 80s or 90s. However, if a health issue has shortened your life expectancy, claiming benefits earlier can help you maximize your total lifetime payout. Waiting for a larger monthly check might not be worth it if your time horizon has become more uncertain.
3. You Have a Strong Retirement Savings Cushion
If you’ve managed to save a substantial amount for retirement, you might not need to rely heavily on Social Security for your day-to-day expenses.
For instance, if you’ve built up $2 million or more in retirement accounts, you might be financially secure enough to start collecting benefits at your FRA or even earlier. This approach can give you the flexibility to enjoy your retirement years without worrying about maximizing every Social Security dollar.
The Bottom Line
While delaying Social Security until age 70 can result in higher monthly checks, it’s not the right choice for everyone. If your job is causing stress, your health is declining, or you have a robust retirement nest egg, it might be worth rethinking when to claim benefits.
Retirement is a highly personal journey, so it’s essential to weigh all your options carefully. The right timing can make a significant difference in your financial comfort and peace of mind.
FAQs
What is the earliest age I can start receiving Social Security benefits?
You can start collecting Social Security benefits as early as age 62, but this comes with a permanent reduction in monthly payments.
How much more can I get by delaying Social Security until age 70?
Delaying benefits past your full retirement age can increase your monthly payments by about 8% annually, up to age 70.
Will my Social Security benefits be taxed?
Depending on your overall retirement income, up to 85% of your Social Security benefits may be subject to federal income tax.
Can I change my mind after claiming Social Security early?
You can withdraw your claim within 12 months, repay what you’ve received, and reapply later for a higher benefit. This can only be done once.
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