Why now isn't the right time to claim Social Security even though you're eligible
If you’ve reached the age where you’re eligible to claim Social Security, it might be tempting to start collecting immediately. But experts warn that eligibility doesn’t always mean it’s the best time to retire, financially speaking.
Social Security benefits are calculated based on your earnings history and the age at which you claim. Claiming at your full retirement age (FRA) ensures you receive 100% of your benefit, while claiming earlier permanently reduces monthly payments. For example, starting at 62 – the earliest age of eligibility – can reduce your benefit by up to 30% compared with waiting until your FRA.
Delaying benefits beyond full retirement age can increase your monthly check thanks to “delayed retirement credits.” These bonuses grow until age 70, offering up to an 8% annual increase in benefits. Over a lifetime, this can translate to tens of thousands of additional dollars, especially if you expect to live into your 80s or 90s.
How timing affects lifetime benefits
Consider a retiree whose full retirement age benefit is $2,000 per month. Claiming at 62 could reduce it to $1,400 per month, while delaying until 70 could increase it to $3,160 per month.
Over a 20-year retirement, this decision could mean a difference of over $200,000 in total benefits.
Balancing current needs with long-term strategy
Deciding when to claim is a personal choice that requires weighing immediate financial needs against long-term gains. Individuals in poor health or with urgent income needs might benefit from claiming early, even at a reduced rate. Conversely, if you are financially secure and expect a longer lifespan, delaying can maximize your total lifetime benefits.
Other factors include ongoing employment, spousal benefits, and taxation. Those who continue working may see a reduction in Social Security if they claim before reaching FRA, due to the earnings test. Married couples can also coordinate their claims to optimize combined household benefits.
Ultimately, eligibility is just one part of the decision. Timing your claim strategically can significantly affect your financial security in retirement. The key is to consider your health, financial needs, and expected longevity before making a choice.
Many experts also note that claiming too early can affect your long-term financial flexibility. While you might need the funds immediately, waiting can significantly increase your monthly benefit, especially if you continue working or have other income streams. Delaying even a few years could mean hundreds of dollars more each month, providing greater stability in retirement and helping offset rising living costs over time.