ONE OF THE MOST CRITICAL DECISIONS we face as we approach retirement is when to claim Social Security benefits. And the timing can be important. While you can start receiving benefits as early as age 62, waiting a few years or until you reach your full retirement age — or even beyond it — can substantially increase the total amount you collect over your lifetime. (See “Find your full retirement age” below.) That said, your personal circumstances may make claiming sooner a more suitable choice.

 

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How might postponing your payments work to your benefit?

Imagine that at age 66 you’re entitled to an annual Social Security benefit of $10,000. If you wait a year to claim it, you forgo the $10,000 for the first year. But if you claim the following year at age 67, you will receive an annual benefit of $10,800, or 8% more — an amount adjusted for inflation, if any, each year for the rest of your life. The amount of your benefit will increase every year that you delay claiming until you reach 70.

 

How could a longer life expectancy change your timing for claiming Social Security benefits?

Today, a 65-year-old can expect to live almost another 20 years on average.¹ “When you consider that one of people’s biggest retirement concerns is outliving their money, waiting to collect Social Security benefits begins to make a lot more sense,” says Ben Storey, director of Retirement Research and Insights at Bank of America. Waiting to claim benefits can be a way to help protect against the economic effects of a longer life.

 

Is delaying Social Security benefits always the right answer?

Waiting can increase the amount you receive over your lifetime — but, as Storey notes, “what’s right for you may be very different from what’s right for me.” There are several reasons it might make sense to claim benefits even as early as 62. Consider your health and your family history — say, for instance, your parents and grandparents didn’t live past 75, or you’ve had ongoing medical issues. Or perhaps you’re single (or married and survivor protection isn’t a factor), or your employment income is limited. In any of these cases, you might want to start receiving benefits sooner.

 

Also consider your other retirement assets. “Claiming benefits earlier might allow you to delay drawing income from your portfolio, which potentially gives it more time to grow,” Storey says. And don’t just focus on your immediate financial needs — also think about your goals, desired lifestyle in retirement and potential upcoming life changes. For example, you might anticipate needing to give attention and financial support to a family member who requires a caregiver.

 

If, after considering all the factors, you decide that claiming your benefits before age 70 seems to make sense, you shouldn’t feel bad about not waiting. “Social Security was conceived as a safety net,” Storey says. “It’s only valuable if you use it when you need it.”

 

How do Social Security benefits work for married couples?

Claiming decisions can be trickier for married couples, especially if one spouse has historically earned significantly more than the other. So the two of you may want to coordinate. “It often makes sense for the higher earner — let’s say it’s the husband — to wait until 66, or even 70, to claim benefits,” Storey says. Doing so increases his benefits throughout his lifetime and, should he die first, for the remaining lifetime of his wife, because her survivor benefit would step up to that of her deceased husband’s.

 

Can you apply for a spousal benefit if your spouse hasn’t filed for benefits?

If you’re married, you can apply for a spousal benefit only if your spouse is receiving retirement or disability benefits. Several strategies that couples once used to increase their lifetime benefits are no longer available. For example, you can no longer file and then suspend your benefit, which allowed it to grow while your spouse collected based on their work record. Similarly, you’re now unable to “claim twice” — or file for spousal benefits at full retirement age while allowing your own future retirement benefit to grow — an option only for those born before January 2, 1954.

 

How does Social Security calculate benefits for divorced spouses?

If you’re not currently married and are 62 or older, you can file for spousal benefits whether or not your ex has filed, as long as you were married for at least 10 years and have been divorced for at least two years. To qualify, your ex must be entitled to benefits, and the benefit you would receive based on your work record must be less than the amount you’d receive based on your ex’s record. This Social Security Administration guide explains these requirements in more detail.

 

Should women think of Social Security benefits differently?

Because women typically live longer than men, waiting as long as possible to claim Social Security benefits can help them maximize their income in later years. Say a single woman, instead of claiming benefits at 62, waits until 70. If her monthly benefit would be $1,000 at full retirement age (age 67 in this example), waiting those extra eight years could increase her monthly benefit by 77% — about $540 per month — compared with the $700 benefit she would have received at age 62.

 

Should the possibility of Social Security’s financial problems factor into your timing?

Unless Congress makes changes to the system within the next decade, Social Security will not be able to pay scheduled benefits in full and on time starting in 2033. That uncertainty might spur you to claim early, so that you can collect as much as possible now. But remember that starting to collect before your full retirement age cuts your benefits — for life. One alternative might be to take a second look at your retirement savings strategy. If your benefits may be reduced over time, that may be even more reason to start saving early, embracing tax-advantaged savings plans and increasing your savings rate over time. 

“Because of all the factors involved, I’d encourage anyone approaching retirement age to speak with their financial, tax and legal advisors,” Storey says. When and how to begin claiming your Social Security benefits are important and complex decisions. It can help to talk with those who understand the rules — as well as your personal situation.