Choosing when to collect Social Security is a major decision that can affect how comfortable your retirement will be. For years, people have debated whether it’s better to start collecting early at 62, wait until the full retirement age (FRA) of 65 or 67, or delay it until 70. Now, a new study sheds light on the best option, and the results may surprise you.
What the Study Says
The study examined how different claiming ages impacted long-term financial outcomes for retirees. Here’s what they found:
- Claiming at 62: If you take Social Security at 62, the earliest age allowed, your monthly check will be reduced by about 30% compared to waiting until your full retirement age. For example, if you’re eligible for $1,000 a month at FRA, you’d only receive about $700 by starting at 62.
- Claiming at 65: This is a common retirement age, but it’s not the sweet spot for Social Security. If your full retirement age is 67, claiming at 65 will still cut your benefits by about 13%. That $1,000 monthly benefit would drop to around $866.
- Claiming at 70: Here’s where things get interesting. By waiting until 70, you can boost your benefits by 24% compared to claiming at your FRA. That $1,000 benefit could grow to $1,240 per month. Over time, that difference can add up to tens of thousands of extra dollars.
Why Waiting Could Be Worth It
The study found that over half of retirees—about 57%—would benefit most by waiting until 70 to claim their benefits. But why? The key is in how Social Security calculates benefits. The longer you wait (up to age 70), the more you receive due to Delayed Retirement Credits. Every year you wait after FRA adds about 8% to your monthly check.
But What If You Can’t Wait?
Of course, waiting until 70 isn’t always practical. Here are some reasons why you might claim benefits earlier:
- Health concerns: If you don’t expect to live long due to health issues, it may make sense to claim early and get the money while you can.
- Immediate financial needs: If you’re struggling to make ends meet, you might not have the luxury of waiting.
- Job loss or early retirement: If you’re unable to keep working, claiming early could provide much-needed income.
- Family longevity: If you come from a family with a history of long life expectancy, waiting could pay off more in the long run.
Breaking Down the Numbers
Let’s look at a simple example to highlight how the math works. Suppose your full retirement age is 67, and your monthly benefit at that age is $1,000:
- If you claim at 62: You’d receive $700 per month.
- If you claim at 65: You’d get about $866 per month.
- If you wait until 70: You’d earn $1,240 per month.
That’s a $540 difference between claiming at 62 and 70! Over a 20-year retirement, that’s more than $100,000 in extra income.
Final Thoughts: What’s Right for You?
While the numbers clearly show the financial advantage of waiting until 70, the right age to claim Social Security depends on your personal situation. If you’re in good health, have a solid financial cushion, and anticipate living a long life, delaying benefits could be a smart move. But if you need the money sooner or have health concerns, claiming earlier could be the better option.
Experts recommend consulting with a financial advisor who can help you weigh the pros and cons based on your unique circumstances. After all, Social Security is a lifelong benefit, and getting the timing right can make a big difference in how secure and comfortable your retirement years will be.
