Social Security benefits play a crucial role in retirement planning, but deciding when to start taking them can be challenging. Should you claim early at age 62, wait until your full retirement age (FRA) of 67, or hold out until age 70 to maximize your benefits? The best choice depends on a mix of financial needs, life expectancy, and other income sources. Let’s break down the numbers and considerations.

How Benefits Vary by Age

Your monthly Social Security benefits depend on when you choose to claim them. The Social Security Administration (SSA) calculates benefits based on your lifetime earnings and adjusts them based on when you start collecting. Here’s how it works at a few key ages:

• At 62, you can start collecting benefits early, but they are permanently reduced by about 30% compared to what you’d receive at age 67, which is considered your "full retirement age" (FRA).
• At 67, you receive 100% of your benefit amount.
• At 70, you maximize your yearly benefits, with an increase of about 8% per year after FRA, totaling approximately 24% more than at 67.

Total Lifetime Benefits: The Breakeven Point

The breakeven point is when the total money you collect from waiting exceeds what you would have received by taking benefits earlier. Generally:

• If you live beyond age 78-80, waiting until 67 or 70 can provide higher lifetime benefits.
• If you need money sooner or have health concerns that could shorten your lifespan, claiming at 62 may make sense.

For example, let’s assume your full benefit at 67 is $2,000 per month:

• At 62, you’d receive about $1,400 per month.
• At 70, you’d receive about $2,480 per month, or nearly 80% more than claiming at 62.

Over time, the person who waits until 70 receives more money by their late 70s compared to someone who started at 62.

Key Considerations for Timing Your Benefits

1. Your Health and Longevity

If your family has a history of long life expectancy and you’re in good health, delaying benefits to 70 might provide the best financial outcome. However, if you have a shorter life expectancy, taking benefits earlier may make more sense.

2. Employment Status

• If you plan to keep working after 62, your benefits may be temporarily reduced due to the earnings limit.
• After reaching FRA, you can continue working without any reduction in benefits.

3. Other Retirement Income Sources

If you have pensions, IRAs, 401(k)s, other investments or home equity proceeds accessible through a reverse mortgage, you may not need Social Security as early. Delaying until 70 can help you increase your overall retirement income.

4. Spousal and Survivor Benefits

• Spousal Benefits: If you’re married, your spouse may be entitled to benefits based on your earnings record. This makes coordinating claiming strategies essential.
• Survivor Benefits: If you’re the higher earner, delaying benefits can increase what your spouse receives after you pass away.

5. Longevity Risk and Financial Security

One of the biggest financial risks in retirement is outliving your savings. Delaying Social Security benefits can act as a form of longevity insurance, ensuring a larger guaranteed income later in life. If you live into your late 80s or 90s, having a higher Social Security check can provide additional security, reducing the risk of running out of money in your later years.

Final Thoughts: Making the Right Choice

There’s no universal “best” age to claim Social Security—it depends on personal circumstances. If you have no reasonable ability to bridge your retirement funding needs to age 70 or have health concerns, claiming at 62 might be best. If you’re financially stable and expect to live a long life, waiting until 70 can maximize your income. One way to delay claiming Social Security is the effective use of a “buffer” asset to provide a bridge for funding retirement until age 70, such as cash reserves, other retirement savings and responsible use of your home’s equity through a reverse mortgage.

Bottom Line: If you live into your 80s or beyond, delaying Social Security pays off. But if you need income sooner, taking benefits earlier is a practical choice.

What’s your plan? Consider using Social Security calculators and speaking with a financial advisor to optimize your retirement strategy.

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