When Should You Claim Social Security Benefits?

The decision to claim your Social Security Benefits requires a lot of thought and careful consideration. It is hard to determine the exact age at which you will receive the most benefit from your claim. Although you can calculate this to a certain extent, it is best to hire a financial advisor who can take into consideration all the factors and understands the intricacies of Social Security Benefits.

Many factors can influence the amount you receive as your benefits, but one of the most obvious and important is the age at which you claim Social Security. You can even choose to receive your benefits before retirement at the age of 62. However, it is advised that you claim Social Security Benefits at retirement age or even after that. 

The retirement age varies from 66 and 67 in different regions. You can determine your full retirement age by visiting the social security website and finding out the full retirement age of the region where you were born.

“Roughly 40% of applicants claim Social Security Benefits at the age of 62 (early retirement age),” explains attorney Jan Dils of Jan Dils Attorneys at Law. “However, if you apply before full retirement age, you will receive lower benefits. The later you claim it, the more benefits you will receive.”

Claiming benefits at the early retirement age causes you to receive 25% fewer benefits. If you wait for the full retirement age, you will receive the total amount. It is even better to wait until after the full retirement age because from the full retirement age to the age of 70, the Social Security Benefits increase by 8% per year.  

To learn how much your benefits will increase or decrease depending on the age you retire, you can visit Social Security’s Early or Late Retirement Calculator. The SSA also offers online calculators to help you estimate your retirement benefits at each age. 

Another factor that influences your benefits is whether you are currently working or not. If you are still working, for every two dollars that you earn over the SSA’s earnings limit after claiming early retirement benefits, you will lose one dollar from your benefits. But if you continue to work after the full retirement age, there is no such deduction.

However, people working in jobs that require heavy manual labor are good candidates for the early retirement age benefits. It is usually more challenging to continue working in such fields after 60, and they may take early retirement.

Another factor that you must take into consideration is your health. If you feel that due to genetics or any other reason, you will not live up to or past the full retirement age, it is best to claim benefits at the early retirement age. But, if you have a high life expectancy and are still healthy, it is more beneficial to claim Social Security benefits at full retirement age or even later.

There are three ages to claim your benefits; early retirement age, full retirement age, and 70 years. Financial planners prefer to calculate your break-even point—that is the age at which two of your total lifetime benefit amounts become equal to each other. If you are in good health, it is advised that you apply for Social Security benefits at a higher age. 

Another essential aspect to consider is which spouse earns more if you are married. The higher-earning spouse should wait until a later age to claim benefits, preferably till the full retirement age. In the unfortunate case of the passing of a spouse, the other can claim the full Social Security benefits of the deceased. 

If you plan to receive these benefits and invest them, you must calculate your returns. If you claim benefits at the early retirement age, you will need at least a 7% return on your investment per annum to make up for the amount you would have received at full retirement age.