Social Security is more than just a monthly check for many Americans; helps them have a comfortable living. Thus, it is very important for people who plan to claim Social Security in the near future to maximize their benefits amount. One of the biggest decisions that help the recipient maximize benefits is when to claim Social Security. A person can claim benefits at age 62 or after, depending on their circumstances. Statistically, however, certain ages are considered undesirable for claiming benefits. In this article, we will discuss the worst ages to claim Social Security.
Why does age matter?
A general rule about Social Security is that the longer you wait to claim it, the bigger your monthly benefits check is. Although you can claim benefits as early as age 62, waiting until your full retirement age (FRA) will allow you to collect the full amount.
Your date of birth determines your full retirement age. FRA is the age when you become eligible to receive 100% of your retired worker benefits. The FRA has increased from 65 to 67 over the past four decades. FRA is age 67 for anyone born in 1960 or later.
In addition to FRA, your claiming age also plays a significant role in determining your benefit check amount. If you claim benefits before your full retirement age, your monthly check will be reduced permanently. On the other hand, if you claim benefits after your FRA, it will increase your benefits for the remainder of your life beyond the amount you would have gotten if you claimed at FRA.
You can further boost your monthly benefits check by waiting until age 70 to claim the benefits. In general, your benefits grow by up to 8% up to age 70 for every year you hold off claiming the benefit. So, with a few exceptions, waiting until age 70 is the best age to claim Social Security benefits.
Talking about the worst ages to claim Social Security, the researchers at United Income – an online investment planning company – in 2019 analyzed retirees’ claiming ages and how it affected their lifetime income. The researchers used that data to determine whether or not retirees filed at the optimal age to maximize their Social Security over their lifetime.
At least statistically, their findings helped to determine the best and worst ages to claim Social Security, and as per their findings, early filers are at a disadvantage with regard to Social Security amount. The researchers studied the claiming decisions of about 20,000 retired workers using data from the University of Michigan’s Health and Retirement Study.
Researchers at United Income found that age 64 was the worst age to claim Social Security as this was the age with the lowest percentage of optimal claims. Three more ages resulted in low probabilities of success – 62, 63, and 65.
So, all these four ages are statistically the worst ages to claim Social Security. It must be noted that all these ages are before the current full retirement age, and thus, it could expose claimants to possible early filer penalties.
Besides lower monthly benefits, early filers may also be subjected to the retirement earnings test. This test informs the SSA (Social Security Administration) whether or not there is a need to withhold some or all of a worker’s Social Security benefits depending on the money they make.
Claiming early isn’t always bad
Although United Income research indicates early filers are at a disadvantage, sometimes claiming early could prove a smart move. For instance, those with a robust retirement fund and don’t necessarily require Social Security benefits, can claim benefits early if they want to retire a few years sooner.
Sometimes, you may be left with no other choice but to claim Social Security early. If you lose your job or are unable to work because of health issues, then claiming Social Security could address your financial concerns.
If you have solid reasons to believe that you may not live well into your 80s or beyond, you could potentially collect more in Social Security by claiming benefits early. Though you will receive smaller monthly payments, you may still receive more over a lifetime than if you were to delay benefits.
Claiming early benefits may also prove a smart move if you and your spouse are eligible to claim Social Security. In such a case, one of you can claim benefits early to have extra cash early in retirement, while the other can wait until age 70 to claim benefits.
Even if you plan to retire early, you can choose to delay claiming benefits so as to maximize them, provided you have enough savings or other sources of income. Doing this, however, could risk depleting your savings too quickly.
So, based on the statistics, ages 62, 63, 64 and 65 are the worst ages to claim Social Security, while age 70 is the best. It is, however, not possible for every retiree to wait until their FRA or age 70 to claim benefits. This is because the retiree’s health, marital status, and financial needs play a decisive role when choosing when to claim benefits.
So, when deciding the best age to claim Social Security, it is recommended that you consider your own personal and financial situation, as well as your priorities in retirement, to make the most of your Social Security benefits.