Think You're Ready to Claim Social Security? Here's the 1 Test You Should Pass First.

Once you turn 62, you’re allowed to sign up for Social Security. And you may be eager to start getting those monthly checks as soon as possible.

But you should know that your filing age could play a big role in the amount of money Social Security pays you each month. So it’s important to approach your claiming decision carefully. And before you file, there’s one key test you need to pass.

Can the benefit you’re eligible for now support your lifestyle?

Once you turn 70, there’s no sense in delaying your Social Security claim. That’s because you won’t get credit for waiting beyond that point.

But if you’re eligible for Social Security and are younger than 70, before you take benefits, it’s important to make sure the monthly checks you’d be locking in can support the retirement lifestyle you want.

Here’s how to know if you’re ready for Social Security:

• Calculate your annual income needs.
• Figure out how much annual income you can get from your savings and non-Social Security income streams.
• Determine the difference.

If the numbers line up, you can feel confident claiming benefits. If filing now leaves you with a shortfall, it’s best to wait.

Let’s say you determine you’ll need $7,500 a month, or $90,000 a year, to cover all of your retirement expenses — both needs and wants. Let’s also say you’ve saved $1.6 million and plan to withdraw from your savings at a rate of 4% per year, which would give you a $64,000 income.

Assuming you have no other retirement income sources, that means Social Security will have to provide you with $26,000 a year to cover all of your needs. If signing up now means locking in a monthly benefit of $2,200, you’re all set. If it means only locking in $2,100 a month, you’re a tiny bit short. And if it means locking in $2,000 a month, you’re even more shy of your goal, which could become problematic over time.

Don’t confuse “can” with “should”

Once you turn 62, you can claim Social Security at any time. But just because you’re eligible to take benefits doesn’t mean you should.

Waiting to file for Social Security could help you avoid an income shortfall not just in the near term but also the long term. It could also give you extra breathing room in your retirement budget for when unexpected bills inevitably rise. Think about the upside of holding off before filing your claim, even if you’re convinced you’re ready to start collecting benefits immediately.