One of the nice things about Social Security is that you’re allowed to decide when you want to start receiving benefits, provided you’re at least 62 years of age. Now you’re not entitled to your full monthly benefit based on your wage history until you reach full retirement age, or FRA, which is 67 if you were born in 1960 or later. But you can opt to file for Social Security before FRA for a reduced benefit, and you can also delay your filing past FRA for a higher one.
In fact, for each year you delay your Social Security claim past FRA, your monthly benefit grows 8%. And that boost remains in effect on a permanent basis.
Now beyond age 70, your benefits won’t be eligible for a further boost, so 70 is typically considered the latest age to claim Social Security — even though you’re allowed to continue to wait. And if your health is great going into retirement, then a delayed Social Security can easily pay off.
But if your health is poor, it’s a very different story. In that case, it’s generally advisable to claim Social Security at FRA or even early. While doing so will mean getting less money on a monthly basis, it might result in a higher sum of money on a lifetime basis.
There is, however, an exception to this rule. And it’s when you have a spouse to think about.
It’s important to look at the big picture
Claiming Social Security early might be the better move for you if you have health issues you think will shorten your lifespan. As an example, if you’re eligible for $1,800 a month from Social Security at an FRA of 67, waiting until age 70 to file will boost your benefit to $2,232 a month.
But if you only end up living until age 75, a Social Security filing at age 70 will give you $172,800 of lifetime income if you claim benefits at FRA, and $133,920 of lifetime income if you file for benefits at age 70. So in this example, waiting could cost you almost $39,000 of lifetime income.
That’s why a delayed Social Security filing usually is not advisable if your health is poor. But if you have a spouse to think about and protect financially, then delaying your Social Security claim could be a wise move, even if it won’t benefit you all that much.
If you’re collecting Social Security and pass away, your spouse will be entitled to survivors benefits. And at that point, your spouse will be eligible to collect the same amount of Social Security income you did each month.
So, getting back to our example. Claiming Social Security at age 70 might leave you with a lot less lifetime income. But if you’re able to boost a monthly benefit of $1,800 to $2,232, your spouse might end up collecting that extra $432 a month for many years, or several decades. So all told, a delayed filing might be the better choice for your household — even if you end up missing out on some income in your lifetime.
Of course, this is the sort of decision you’ll want to make jointly with your spouse. And you’ll also want to take things like your other income sources into account when making your choice. The point, however, is that you shouldn’t assume that a delayed filing isn’t the right call when your health is poor. You may end up wanting to hold off on claiming benefits as long as you can for the sake of your spouse.
