When should you claim Social Security? That’s almost impossible to answer because a lot depends on your personal circumstances. Some people will end up with far more money by waiting to claim benefits as long as possible, while others could see more lifetime income by starting to get checks ASAP.
But while it’s difficult to know for certain which Social Security claiming strategy is best in every situation, there are certain key signs that suggest you should wait until 70. Here are three of them.
1. You want the largest monthly benefit
Retirees can start benefits as soon as they turn 62, but those benefits will be much smaller than if they’d waited. The retirement benefit system is designed so that those who claim their money early get smaller monthly checks since they’ll receive more of them over time.
Those who wait until their full retirement age, which is between 66 and 67, get their standard benefit as determined by their inflation-adjusted average wages. And retirees who wait earn delayed retirement credits that raise benefits by 2/3 of 1% per month — which adds up to 8% per year. You can earn these credits only until 70, though, so waiting until 70 makes sense if you want the most money each month.
If your standard benefit based on your earnings would’ve been $1,500 at a full retirement age of 66, by waiting until 70 you can raise that to $1,980 per month. The extra money really comes in handy if you start to run short of savings later in life.
2. You want to maximize spousal benefits
When one spouse passes away, the surviving spouse gets to keep the larger of the two benefits. If you are the higher earner and you claim your checks before age 70, you’ll shrink the benefits that your surviving spouse receives.
The death of a spouse has a huge effect on household income and can send some seniors into poverty. If you don’t want to leave your partner with less money to live on, wait until 70 to claim your retirement money so survivor benefits will be as large as possible.
3. You expect to live a long time
Remember above how I mentioned the system was designed so those who claim benefits early get more checks but smaller ones? This happens because, in theory, it’s not supposed to matter when you start your benefits. The system is designed so that if beneficiaries live to their normal life span as projected by Social Security’s actuarial tables, they’ll get the same amount of money whether they claim benefits early or claim late.
But most people don’t pass away exactly when predicted. For those who die young, waiting until 70 to start Social Security benefits would be the wrong choice. They might not live long enough to get any benefits. And even if they do, they might receive larger checks for just a few months or a few years — not enough time for the higher payments to make up for the years of missed income.
But if you think you’ll outlive your projected life span, it’s a different story. Once you live long enough that your higher monthly benefit covers the income you’d have gotten had you not delayed your claim, you’ll still keep getting the larger checks. Every extra dollar you get will be money that would’ve been left on the table had you claimed benefits earlier.
Of course, you can’t predict if you’ll live a long time. But you can consider your current health status and family health history to make an educated guess. If you feel pretty confident in assuming you’ll live a long while — or if you think your spouse will outlive you and collect your higher benefits for many years — then waiting until 70 is probably going to be your best bet.