The Pros and Cons of Claiming Social Security Benefits at Different Ages

 

Deciding when to start taking Social Security benefits is a complex decision with many factors to weigh. While delaying until age 70 provides the largest monthly check, claiming early at age 62 or at your full retirement age offers advantages too, depending on your situation.

Understanding the pros and cons of each option can help you make the choice that maximizes your financial security in retirement.

Claiming at age 62 provides an immediate income stream and the opportunity to invest your benefits to potentially generate growth. However, your payments will be up to 30% lower for life compared to waiting.

For those with health issues or a short life expectancy, the smaller checks over a longer period may provide more value. If you have little savings and need the income, early benefits could be your best option.

Waiting until your full retirement age (currently 67 for most) to claim provides significantly larger payments than at 62 with no reduction. You'll get 100% of the benefit you've earned to date.

While not the maximum amount possible, full retirement age may strike a good balance between locking in a stable income and receiving bigger checks than claiming early. You can also continue working without impacting your benefits.

Delaying benefits up to age 70 results in a permanent increase of up to 32% in your monthly payments compared to full retirement age. For healthy individuals with a long life expectancy, the higher lifetime income could outweigh the opportunity cost of waiting.

However, there is a risk you may not live long enough to recoup the larger payments. You must also forgo benefits for up to 8 years, which may not be feasible without other income or savings.

As you can see, there are good arguments to be made for claiming at 62, full retirement age, or 70.

Looking at your health, life expectancy, financial situation, and needs can help determine which choice is right for you. With Social Security, one size does not fit all, so consider your options carefully based on your own circumstances.