Claiming early shrinks your monthly checks, but it could seriously pay off over the long run in these scenarios.
I won’t even be eligible for Social Security for another three decades, but I already know I want to claim at age 70. This will get me my largest possible checks, since delaying benefits grows your benefit a little each month until then. Since I’m fairly healthy, I think waiting will give me my largest lifetime benefit too. But this isn’t a choice I would encourage everyone to make.
Signing up at 62 makes good financial sense for a lot of people, even though it can reduce their monthly checks by up to 30%. It’s even a decision I would make for myself if any of the following three things happened.
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1. My health took a turn for the worse
Right now, I have no major health issues, so I expect to live until my mid-80s at least. But if I had a terminal illness, I would probably change my claiming strategy and apply for Social Security as soon as I could. This would allow me to claim as many checks as possible before I passed away.
But it would depend on my financial situation at the time. When you claim Social Security early, you also reduce your spouse’s maximum survivor benefit. These are the monthly checks Social Security gives your family after you die. If I was in a decent financial spot, I might choose not to claim Social Security at all so my husband could receive larger checks after I was gone.
2. I couldn’t afford my bills any other way
I’ve been prioritizing retirement savings as much as possible since my early 20s, so I hope to have a nest egg that’s large enough to cover all my expenses until I’m ready to claim Social Security at 70. But anything is possible.
If I found myself struggling financially in my early 60s, I would probably claim Social Security at 62. This might shrink my lifetime benefit, but it would give me a better chance at maintaining my financial independence going forward. My checks would provide a steady source of income to supplement my personal savings, so I wouldn’t have to go it alone.
I’d probably explore all my other options before making this choice, though. If I was still able to work, I might choose to stick it out in the workforce for a while longer so I could have a steady paycheck rather than claiming Social Security early. I might also see if I could get by with just cutting back my monthly expenses. But if that was impossible, I’d have no problem applying for Social Security early.
3. Claiming early could maximize my household benefits
With decades left to go in the workforce and Social Security’s future uncertain, it’s tough to know what kind of benefits my husband and I might receive from Social Security. We’ll both be dually eligible: We’ve worked long enough to claim retirement benefits on our own, and we’ll also qualify for spousal benefits on each other’s work record. But the Social Security Administration will only give us the higher of the two.
Right now, I expect that we’ll each claim our own retirement benefits. So I think delaying Social Security until 70 will maximize our household benefits.
But if my spousal Social Security benefit wound up being much higher than my retirement benefit, I’d be more tempted to claim early. My checks could provide us with a little monthly income while my husband delayed so he could get a larger monthly benefit. Then, when he applied, the Social Security Administration would switch me to my spousal benefit.
Since there’s still so much that’s uncertain, all I can do is choose a claiming age that I believe makes the most sense for me now and adjust it if my circumstances change. I review my retirement plan at least annually, and so far, I believe I’m on track to claim at 70. But I’ll never rule early claiming out completely. In the situations I outlined above, it really is the best choice.
