Your health status, expected lifespan and retirement funds all play a role in when it makes sense to claim Social Security. Of course, you’re eligible to start taking Social Security at age 62. But the longer you wait, the higher your monthly benefit will be, and conventional wisdom says you should hold out as long as possible to ensure more robust checks. In other words, your patience will be rewarded in the long run. But open the hood to take a closer look at the numbers, and the benefits of procrastination diminish.
To explore this, we used SmartAsset’s Social Security Calculator to examine how total earnings add up when claiming at age 62, 67, and 70. For these hypothetical purposes, we consider a person born in 1960 — who will reach his or her first eligibility next year, and whose full retirement age is 67 — earn $60,000 a year.
When making the decision of when is the best time to claim Social Security, you should consult a trusted financial advisor to determine what is best for your situation.
In this scenario, you would receive monthly checks over $1,871 if you claimed Social Security at age 62. If you waited until 67, that initial monthly fee would be $2,674 (+43%). And for every year that you delay claiming Social Security benefits after your full retirement age until age 70, you would receive an additional 8% of your Social Security benefits (our calculator takes into account adjustments to Social Security cost of living in all three scenarios) . That means if you wait until age 70 instead of claiming Social Security at 67, you’d increase your checks by 24% to $3,315 (almost double the benefit you’d get if you claimed at 62).
Over time, the procrastination really adds up. At age 93, you would make $952,151 by claiming Social Security at 62, $1,080,426 by waiting until 67, and $1,147,820 by waiting until 70. average lies; in 2020, the CDC estimated the life expectancy of Americans at just 77.3.
If you compare the three scenarios at age 77, you would have: $388,748 if you started claiming Social Security at age 62, $351,354 if you started claiming at age 67, and only $295,802 if you started claiming at age 70 (almost $100,000 less than when you claimed it at age 62). Look:
So when does it become worth waiting? By deferring Social Security benefits for five or eight years after age 62, those even nicer checks take a while to catch up on the money amassed by claiming Social Security as early as possible. If you claim Social Security benefits at age 67, it will take until between your 81 and 82 for your total Social Security benefits to exceed what you would have if you started claiming at age 62. Meanwhile, if you claimed Social Security at 70 instead of 67, you’d have to get close to 85 for your total Social Security earnings to make it worth the wait.
Of course, there are benefits to delaying retirement: working another year means building your nest egg for a year longer and phasing out a year less. And waiting until full retirement age also means that any income you earn during retirement won’t reduce your Social Security benefits. And over time, through your late 80s and into your 90s, the benefits of waiting to claim Social Security become more pronounced – by 2048 (age 88), there will be nearly a $100,000 difference between claiming at 62 and claiming at 70. And by 93, waiting for 70 would get you $67,394 more than claiming at 67 — and almost $200,000 more than claiming at 62. That’s a huge chunk of change to use or pass on to you in your later years. heirs. But if you wait to claim in hopes of getting the most money from the government, you’re putting a bet on your longevity that may not pay off.
While retirement gurus typically extol the virtues of waiting to take Social Security, there are definite benefits to claiming your Social Security benefits as early as possible when you consider life expectancy. Of course, that’s to say nothing about the potential to invest money from those early Social Security checks and leave more money in your other retirement accounts to grow.
Social Security Tips
A financial advisor can help you decide when it makes sense for you to rely on Social Security. SmartAsset’s free tool connects you to up to three financial advisors in your area, and you can interview your advisor matches at no charge to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
A Social Security calculator can also help you decide when to retire and when it may make sense for you to claim your Social Security benefits.
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