Nearly everyone is aware of the incredible benefits available to you through Social Security. However, there is lots of confusing information out there regarding the best time to file for these benefits.
The bottom line is that there's no such thing as a perfect time to file. Everyone's situation is different.
It's a decision only you can make, based not only on numbers but also on all sorts of personal circumstances you know better than anyone else. That said, I can give you some general guidelines to help you get the maximum amount you've worked for all these years.
Your Options
The earliest you can start drawing Social Security is age 62, and the latest is age 70. In between is that magic number "full retirement age," which depends on your date of birth.
For people born between 1943-1954, the FRA is 66 and for those born in 1960 or later, it is 67. If your birthday is between 1955 and 1960, your FRA will be 66 plus some months. Filing at your full retirement age gets you the full benefits you are entitled to for the money you have paid into the system over your years of work.
Reasons to File Sooner
It's safe to say that the number one mistake most people make with Social Security is filing too soon and reducing their monthly checks. You can lose as much as 30% of the benefit amount you're entitled to this way.
However, there can be some very good reasons to do so. Your individual financial circumstances may be such that you are not able or willing to work those extra years. If you have responsibility for raising a young grandchild, for example, or if you or another family member are starting to experience health issues.
It may also be advantageous for the lower-earning spouse in a married couple to start drawing Social Security as soon as possible while the higher-earning spouse waits until full retirement age or beyond.
Life expectancy is another consideration. No one likes to think about their own passing, but if you're in poor health and have a family history that suggests your lifespan may be on the shorter side, rather than the longer side, then drawing benefits early may help your family's financial bottom line more.
The Social Security Administration provides a Life Actuarial Table that can help you think through life expectancy issues.
Reasons to File Later
Probably the best reason to wait until later to retire, even up to age 70, is that you love your job and still have the energy and creativity to pour into it. There's absolutely no reason to stop doing something you love just because of an arbitrary date on the calendar.
This isn't the experience for everyone, though. Even when people are not overjoyed in their work, financial considerations may still drive a decision to keep working well past full retirement age.
One of the main reasons to decide to keep working past full retirement age is that you'll get an 8% bump up in your benefits for each year you wait, up to age 70. Someone born in 1960 can get up to 124% of their full retirement benefit for the rest of their life if they do that.
This is an especially good choice for someone who has other investments or means of support and is not totally reliant on Social Security, and for people who have reason to expect they will have a full and long life expectancy, based on their lifestyle and family history.
Filing is Not an End, It's a Beginning
Whether we're talking about bathing suits or finances, the choices we make are sometimes more emotional than logical.
For some people, filing their Social Security paperwork feels like an ending. Like the first time someone called you "Ma'am," or when you noticed your first white hair, or when the teenager behind the cash register asked if you wanted a seniors' discount, starting Social Security can feel like a symbol of aging.
Instead, think of it as the beginning of a different chapter or season of life. One where you have the experience and confidence to make smart decisions about your finances and your time. One where you are driving your life, instead of your life driving you.
Photo by Scott Graham on Unsplash
About the Author
Matt Feret is the author of the Prepare for Social Security - The Insider’s Guide and the Prepare for Medicare - The Insider’s Guide book series and launched PrepareforSocialSecurity.com to help people get objective answers to questions about Social Security and Medicare. Matt is also the host of The Matt Feret Show. He has held leadership roles at numerous Fortune 500 Medicare health insurers in sales, marketing, operations, product development, and strategy for over two decades.