For many retirees, Social Security income is an essential part of their financial strategy. But what’s the right time to file? A Nerdwallet article, Should You take Social Security at 62, 67 or 70? has some useful details.
62 vs. 70 — A Vast Difference
As many people likely know, the earliest you can file for Social Security is age 62, but if you do so, your monthly payment will likely be reduced because, as the article notes, most people aren’t eligible for their full benefit until they reach age 67.
If you wait until you’re 70, you’ll receive as much as 124% of your full retirement age benefit.
Reasons To File At 62
The article cites recent data from the Social Security Administration that found that the average monthly payment for recipients who are 62, is about $1,274. That number is 70% of what that recipient would have received had they waited to file until their full retirement age.
Here are some of the common reasons for filing at 62:
- You need money right now
- You have health issues that could shorten your life expectancy, or you don’t anticipate living beyond your break-even point
- You’re receiving early retirement from your employer and those benefits end when you turn 62
- You have dependent children or an eligible spouse who may receive a monthly benefit up to one-half of your full retirement amount, but they can’t begin collecting those benefits until you begin receiving your own payment
- You’re eligible for survivor benefits on someone else’s Social Security record and want to apply at 62 and then switch to your own Social Security benefit when at, or after, your full retirement age
But Maybe 67 Is Better
The average monthly payment for someone who’s 67, according to the Social Security Administration, is about $1,844 a month.
In most cases, those filing for Social Security at 67 will receive 100% of the benefit they’ve earned.
Here are some of the main reasons many people wait until 67, which again, is the full retirement age for most current American workers:
- You intend to continue working while receiving Social Security benefits because at this point, the money you earn on the job won’t affect your benefits because there’s no more annual earnings limit
- You were able to wait until you were 67 but can’t afford to keep delaying Social Security income
- You don’t anticipate living past your break-even point for collecting benefits at 67 rather than 70
The Power Of 70
Waiting until age 70 means you’ve reached the point when there’s no longer a financial benefit for waiting to file. Let me reiterate that waiting until you’re 70 means you’ll receive 124% of your full retirement age benefit.
The most recent Social Security Administration data tells us the average 70-year-old recipient is currently receiving about $1,963 a month.
Here’s a rundown of why you may want to wait until you’re 70 to file for Social Security:
- You have other income sources and therefore don’t need Social Security income until you’re 70
- You anticipate living a long time
- You understand that your benefits don’t increase if you wait until after you’re 70 to file
Working with a financial services professional can help you build a Social Security strategy that fits well into your broader goals and financial strategy.