If you're a member of the Procrastinators' Club, you may be planning to file for your Social Security benefits as late as you can -- but should you actually do so?
Each of us has a "full retirement age" (FRA), at which we can start collecting our full benefits, and it ranges from 65 to 67, depending on when we were born. But we can actually start collecting as early as age 62 and as late as age 70. Here's why you might want to not file early or late and instead file on time.
part of an airport flight information screen, showing lots of flights marked as on time
Image source: Getty Images.
What's on time? Meet your full retirement age
Here's a quick way to see what your FRA is:
Birth Year
Full Retirement Age
1943 to 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 or later
67
Source: Social Security Administration.
Your FRA matters, because you can make your benefit checks bigger by starting to collect them after your FRA and can make them smaller by starting to collect early. Just how much bigger or smaller? Well, check out the table below, which shows the approximate percentage of your full benefits that you'll get if you start collecting at various ages. It's not precisely accurate if your FRA is, say, 66 and 6 months, but it's quite close.
Start Collecting at:
Full Retirement Age of 66
Full Retirement Age of 67
62
75%
70%
63
80%
75%
64
86.7%
80%
65
93.3%
86.7%
66
100%
93.3%
67
108%
100%
68
116%
108%
69
124%
116%
70
132%
124%
Source: Social Security Administration.
Given all that, you might now be convinced that you should wait until age 70 to start collecting, for the bigger checks. Or maybe you're aiming to start collecting at age 62, to help you retire early. It's worth considering, though, whether you'd be better off starting on time, at your FRA. Here are three good reasons to do so.
1. Starting earlier or later probably won't make a big difference
While it's true that your Social Security checks will be a lot smaller or bigger if you collect them early or late, the total dollars you receive from the program in your lifetime aren't likely to be as different as you thought, no matter when you start.
That's because the system is designed to be a wash for those with average-length lives. The Social Security Administration has explained that, "If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between." After all, if you delay starting to collect from age 67 to age 70, you will miss out on three years' worth of payments -- that's 36 payments.
Of course, it does sometimes make sense to delay starting to collect, such as if you want to keep working full time or if your family history suggests that you'll live a very long life. For most people, though, starting to collect those checks on time -- or, if we can swing it, even earlier -- is a move that can serve us well.
blue background and torn paper on which is written timing is everything
Image source: Getty Images.
2. Your higher-earning spouse is delaying collecting
Another reason to start collecting your benefits on time (if not earlier) is if you're married and your spouse has collected higher earnings from his or her jobs. In such a case, he or she is in line to collect fatter checks than you are -- especially if they can hold out until age 70 (if one or both of you expect or hope to live long lives). If you're the one expecting smaller checks, you might start collecting your benefits on time, so that the two of you have some Social Security income arriving until the point at which both of you have checks arriving each month.
It's also a smart strategy because it's likely that one spouse will outlive the other, and at that point he or she will only receive one of the two checks that used to arrive -- whichever is bigger. So by making one of the benefit checks as big as possible, you'll leave the surviving spouse with more income than if both spouses started collecting early or on time.
There are many other strategies for how best to time your Social Security benefits and for maximizing your benefits.
3. Because it's a good compromise
Ideally, many or most of us would retire early -- starting to collect Social Security at age 62. (That actually is the most common age at which retirees start collecting.) If you can afford to do so, go for it! You'll likely be able to enjoy your retirement more in your 60s than your 70s and 80s, being healthier and more active. If you think you don't have enough socked away to retire early or even on time, and you're aiming to retire at 70, think again. You may be able to retire right around your full retirement age and start collecting Social Security on time. And that can be a great compromise.
To help yourself have enough money to do this, it can be worth getting aggressive in saving for retirement and aiming for as early a retirement as possible -- if only because you might have to retire early. Many of us don't get to choose when to retire, after all. Health issues, a job loss, or having to care for a loved one can take us out of the workforce earlier than planned.
No matter how much you have socked away now, you can improve your situation dramatically if you have a few more years in which to save and invest. The table below shows how much more you might amass over several relatively brief time periods if you save aggressively and your money grows by an annual average of 8%:
Growing at 8% for
$10,000 Invested Annually
$15,000 Invested Annually
$20,000 Invested Annually
3 years
$35,061
$52,592
$70,122
5 years
$63,359
$95,039
$126,719
10 years
$156,455
$234,682
$312,910
12 years
$204,953
$307,429
$409,906
15 years
$293,243
$439,864
$586,486
Source: Calculations by author.
Take some time to figure out how much income you'll need in retirement and how you will amass that sum. Social Security can be an enormous help supporting you, but you'll likely need additional income to supplement it.
