Social Security benefits can contribute significantly to your ability to enjoy a more comfortable retirement, so it’s prudent to maximize them.
While your base benefit amount is determined by your career earnings, there is another factor that can increase your benefit amount by up to 24% – and you have complete control over it.
How your age affects the amount of your benefit
Apart from your earnings history, the age at which you file for Social Security has the greatest impact on the monthly benefit you receive.
To collect the full benefit amount to which you are entitled, you must wait until you reach full retirement age (FRA). Your FRA is 67 if you were born in 1960 or later.
If you file for benefits prior to reaching your FRA (as early as age 62), your benefits will be reduced by up to 30%. However, if you wait until age 70 to begin receiving benefits, you will receive your full benefit amount plus a 24 percent monthly bonus.
Additionally, keep in mind that these adjustments are permanent. Therefore, if you delay benefits, you will receive these larger checks for the remainder of your life – regardless of how long you live.
Is deferring benefits the best course of action for you?
If your retirement savings are running low or you simply want to earn as much money as possible each month, delaying benefits may be the best course of action. Depending on your monthly benefit amount, delaying filing could result in hundreds of dollars more in monthly benefits.
According to the Social Security Administration, the average monthly benefit in 2022 will be $1,657. As an example, suppose you have a FRA of 67 years and file at the age of 62. Your benefits would be reduced by 30% in that case, leaving you with approximately $1,160 per month.
On the other hand, if you wait until age 70 to file, you will receive your full benefit amount plus an additional 24%, or $2,055 per month — nearly $900 more than if you filed at age 62.
When it may be prudent to make an early claim
While deferring Social Security is one of the most effective strategies for increasing the size of your monthly payments, it is not for everyone.
If, for example, you lose your job or are otherwise forced into early retirement, you may be better off claiming benefits early. While you are not required to file for Social Security immediately upon retirement, you risk depleting your savings prematurely if you retire early but choose to delay benefits.
Additionally, if you have reason to believe you will live a shorter than average lifespan, filing early may be the prudent course of action. If you avoid spending decades in retirement, you may actually receive more money over the course of your life if you file sooner.
The age at which you begin claiming Social Security benefits is a personal choice that is unique to you. By weighing the advantages and disadvantages of both options, you can determine whether claiming benefits early or delaying benefits is the best course of action for you.