Considering a Delay in Claiming Social Security? Here's What to Ponder Upon for a Year's Worth of Potential Benefits
The age at which you claim Social Security retirement benefits can significantly impact the size of your monthly payments. Claiming early, at the age of 62, results in a permanent reduction of approximately 30% compared to claiming at your Full Retirement Age (FRA), typically 67 for those born in 1960 or later [1][2][4][5].
Full Retirement Age (FRA)
Your FRA is a crucial factor to consider. Claiming at FRA ensures you receive your full primary insurance amount (PIA) [1][4]. For most people, the FRA is 67.
Lifetime Health and Life Expectancy
If you have health concerns or expect a shorter lifespan, claiming earlier (even with reduced payments) may be more beneficial, as you might collect more total benefits sooner [2]. Conversely, if you anticipate a long life, delaying your claim could result in a larger total lifetime benefit.
Financial Needs and Income
Immediate financial needs might favour earlier claiming despite reduced monthly checks. However, if you have other income sources and can delay claiming, your future benefit grows, which benefits longer lifespans [1][2].
Delayed Retirement Credits
For each year you delay beyond FRA (up to age 70), your benefits increase by about 8% annually, incentivizing later claiming if you expect to live longer [1][2][4][5]. However, after age 70, you can no longer earn additional delayed retirement credits.
Work Status
Continuing to work while claiming before FRA may temporarily affect benefits due to earnings limits [3].
In summary, claiming early reduces your monthly benefit permanently, claiming at FRA gives full benefits, and delaying up to age 70 increases monthly benefits. The decision should balance your health, expected longevity, financial needs, and retirement goals to optimize total lifetime benefits [1][2][4][5].
Family Considerations
Family members won't be eligible to claim checks on your work record until you apply for benefits. Delaying Social Security can permanently reduce the survivor benefits your family members may be eligible for after your death. It's best to discuss your Social Security claiming strategy with all affected family members to come up with a plan that works best for everyone.
[1] Social Security Administration [2] AARP [3] Investopedia [4] Forbes [5] NerdWallet
personal-finance plays a vital role in choosing the time to claim Social Security retirement benefits. Early claiming at 62 results in lower monthly payments, compared to claiming at Full Retirement Age (FRA) that ensures receiving the full primary insurance amount (PIA). Financial needs and income can guide the decision, as immediate needs might necessitate early claiming, while additional income sources may allow for delaying. Delaying beyond FRA up to age 70 can increase the monthly benefits, but earnings limits may temporarily affect benefits if you continue working before FRA. Therefore, it's essential to consider personal-finance, health, lifespan, and retirement goals when deciding the best time to claim Social Security benefits to optimize overall lifetime benefits.
