The fact that you have a choice about when to file for Social Security benefits can be both a blessing and a curse. On a more positive note, you have the ability to earn a higher monthly benefit for the rest of your life. On the other hand, you may struggle mightily to make that choice, to the point where you continue to doubt yourself during retirement.
If you apply for Social Security at full retirement age (66, 67, or somewhere in between, depending on your birth year), you will receive your full monthly benefit based on your earnings history without any reduction or increase. If you enroll before reaching full retirement age – which begins at age 62 – you will receive a reduced benefit, but you will receive your money sooner. Additionally, if you file after reaching full retirement age, you will receive a larger monthly benefit (though benefits cannot be increased beyond age 70).
There is no denying that your approach to claiming Social Security benefits could have significant long-term consequences throughout your senior years. However, if you’re having difficulty settling on a filing age, tackling one difficult but critical question may be your ticket to arriving at the correct answer.
How long do you believe you will survive?
Because none of us has access to a crystal ball (at least not an accurate one), there is no such thing as accurately predicting our own life expectancies. However, we can make educated guesses based on the information we do have.
There is always the possibility of being involved in an accident or contracting an illness and dying at a relatively young age. Apart from that, there are two factors that will almost certainly affect your life expectancy:
Your health as you approach retirement
The longevity of your family
If your health is excellent, you have a good chance of living longer than someone who retires in poor health – even more so if your family has a history of living longer lives. If that is the case, then filing for Social Security benefits later in life may make sense. Taking this route may result in a higher monthly benefit as well as a higher lifetime benefit.
On the other hand, if your health deteriorates as retirement approaches and you do not come from a particularly long-lived family, you may wish to claim Social Security early. This may result in a monthly income reduction. However, you may end up collecting more total Social Security income over the course of your lifetime.
What is the proper course of action?
Social Security may play a significant role in your retirement finances, so it’s critical to give your decision careful consideration – which may include contemplating your own mortality. Clearly, this is not a pleasant or comfortable situation to be in. However, it is a necessary exercise if you want to increase your chances of landing on a filing age that you will not regret.