Social Security serves as a major income source for millions of retired seniors, and unless you've really saved a bundle, chances are you'll end up relying on those benefits in retirement as well. Now you'll often hear that it's best to avoid filing for Social Security early, because doing so winds up reducing your benefits. And that's definitely some solid advice. Whether it actually pertains to you, however, is a different story.
Social Security: Your filing age matters
Your Social Security benefits are calculated based on your 35 highest-paid years of earnings. The age at which you file for them, however, will dictate whether that number goes up, goes down, or stays the same. If you file at full retirement age (FRA), you'll get the exact monthly benefit your earnings record renders you eligible for. FRA is based on year of birth, as follows:
| 1943-1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 | 67 |
Data source: Social Security Administration.
That said, you're allowed to start claiming benefits as early as age 62. And while you can technically file at any age after that, 70 is generally considered the latest age to sign up for benefits, since there's no financial incentive to wait past that point. Delaying benefits past FRA will boost them by 8% a year up until age 70 is reached, while filing ahead of FRA will reduce them by 6.67% a year for the first three years they're taken early, and 5% a year after that. That might sound complicated, but it means that if you're looking at an FRA of 67 and you file at 62 instead, your monthly benefit will be reduced by 30%. And unless you undo your filing within a year and repay the benefits you collected, that reduction will remain in effect for the rest of your life.
Image source: Getty Images.
As such, seniors are often advised not to sign up for a lifetime of lower benefits. But the reason you might want to do so anyway could come down to one important thing: avoiding boredom early on in retirement.
Keeping your spirits up
Retirees are 40% more likely to suffer from clinical depression than workers, and the reason often boils down to feeling bored and restless. Furthermore, workers don't always get to retire when they want to; an estimated 60% are forced into early retirement due to reasons such as getting laid off or being physically unable to continue working. As such, it's not uncommon to land in a situation where you'd rather be working, but can't, yet don't have the money in savings to entertain yourself adequately.