Social Security is a crucial component of retirement planning, offering financial security for millions of seniors in the United States. Deciding when to start claiming Social Security benefits is one of the most important financial decisions you’ll make.
While the earliest age to claim benefits is 62, there’s a significant difference in monthly payouts depending on whether you claim at 62, 67, or 70.
In this article, we will break down the key differences between these three options and help you determine which one might be the best for your financial situation.
Social Security Benefits at Age 62
Age 62 is the earliest age you can begin claiming Social Security retirement benefits. However, this comes with a trade-off. While you’ll start receiving monthly payments, those payments will be reduced. Specifically, you will receive about 25-30% less per month than if you waited until your full retirement age (FRA) of 67.
Why Claim at 62?
- Immediate Access: If you need income right away, claiming at 62 might be a good option.
- Health Concerns: If you have health issues or don’t anticipate a long retirement, claiming early might make sense.
- Financial Necessity: If you’re financially struggling or have limited retirement savings, claiming early could help you meet your immediate needs.
However, claiming early means fewer benefits over the course of your retirement. It also means missing out on the “delayed retirement credits” that you can earn by waiting until age 70 to claim.
Social Security Benefits at Age 67 (Full Retirement Age)
For those born in 1960 or later, 67 is the full retirement age (FRA), the age at which you can claim your full, unreduced benefit. If you wait until age 67, you will receive your maximum monthly benefit based on your lifetime earnings.
Why Claim at 67?
- Maximum Benefit for Most People: If you’re in good health and don’t need to start taking benefits early, 67 offers the balance of getting your full benefit without further delay.
- Work Longer: If you enjoy working and don’t need Social Security yet, delaying benefits until 67 is a good compromise between maximizing benefits and enjoying your work life.
- Health and Longevity Considerations: For those who are healthy and expect to live well into their 80s or 90s, claiming at 67 ensures a stable income for a longer period.
While 67 is a good middle ground for many, waiting even longer will further increase your monthly payment.
Social Security Benefits at Age 70
Waiting until age 70 to claim Social Security is often the best option for those who can afford to wait. You can increase your monthly benefit by 8% per year for each year you delay past your full retirement age. If you were born in 1960 or later, this means your benefits will be 24% higher than at age 67.
Why Claim at 70?
- Larger Monthly Payment: Waiting until age 70 means you will receive the highest possible monthly benefit. This is especially beneficial for those who expect to live a long time in retirement.
- Maximizing Retirement Savings: If you have other sources of income (like pensions, savings, or investments) and don’t need Social Security immediately, waiting until age 70 can significantly boost your financial security.
- Delaying for Higher Returns: If you’re financially stable and healthy, waiting for a larger monthly check can help you maintain a higher standard of living later in life.
The Comparison: Benefits at 62, 67, and 70
Here’s a quick breakdown of the benefits at 62, 67, and 70 for someone with an FRA benefit of $2,000 per month.
| Claiming Age | Monthly Benefit | Percentage of Full Benefit |
|---|---|---|
| 62 | $1,500 | 75% |
| 67 | $2,000 | 100% |
| 70 | $2,480 | 124% |
Which Age Is Best for You?
The decision of when to claim Social Security benefits depends on several factors, including your financial needs, health, and life expectancy. Here’s a general guide to help you decide:
- Claim at 62 if:
- You need the money immediately.
- You have health concerns that could limit your lifespan.
- You don’t have substantial retirement savings or other income sources.
- Claim at 67 if:
- You want to receive your full Social Security benefit.
- You plan to continue working or have other sources of income.
- You’re in good health and expect a long retirement.
- Claim at 70 if:
- You want to maximize your monthly benefit and have other retirement income.
- You are in excellent health and expect to live a long life.
- You can afford to wait and don’t need Social Security benefits immediately.
Final Thoughts
There is no one-size-fits-all answer to when you should start claiming Social Security. The decision depends on your personal circumstances, including your financial needs, health, and retirement goals. However, for most people, waiting until age 70 offers the largest monthly benefit and the best long-term financial security.
If you can afford to delay your benefits, doing so can significantly improve your quality of life in retirement. But if you need the money sooner, claiming at 62 or 67 may be the better option.
Before making any decisions, it’s wise to review your finances and consult with a financial advisor to determine the best strategy for your retirement.
