Exploring Two Query Points Could Indicate the Ideal Moment for Registering for Social Security Benefits
Exploring Two Query Points Could Indicate the Ideal Moment for Registering for Social Security Benefits
Claiming Social Security at the ripe age of 62 is a popular choice due to the numerous benefits it offers. You receive benefits for the longest period and acquire the most checks. However, statistics indicate that the maximum lifetime benefit is achieved by waiting until you're 70 to claim, resulting in the largest checks.
This presents a dilemma for workers: Should they grab the substantial checks early, or delay and endure financial hardships in the short term in anticipation of a better future? Or is the middle ground the best solution, opting for the age the government labels as the full retirement age (FRA)?
Your decision hinges on your circumstances. Answering these two questions can assist in making an informed choice.
1. How do you envision your financial situation at 62?
Delaying Social Security claims can ensure the highest lifetime benefit, but it mandates self-reliance in financing your expenses for an extended period. If you boast a substantial savings or maintain a stable job, this may be a manageable task. However, not everyone can afford this luxury.
If your present financial situation is precarious, the allure of larger Social Security checks in the future fades when delaying application strains your finances. If you're on the brink of homelessness without Social Security, your predicament is straightforward: Claim early and utilize the monthly checks to safeguard your financial well-being.
2. How long do you foresee living?
5/12 of 1% per month (5% per year) from:
Should your financial situation permit delaying Social Security, you acquire more flexibility. Your primary objective becomes maximizing your lifetime benefit. Your life expectancy is crucial here.
62 to 63
Individuals who anticipate their life span to end before 70 often benefit more from claiming early, as it ensures a longer sequence of checks. The risk of delaying application stems from the uncertainty of surviving until you can commence receiving benefits, rendering the program irrelevant.
62 to 64
In contrast, if you believe you'll live past 80, there are advantages to delaying your application. For every month you postpone claiming until you reach your maximum benefit at 70, the Social Security Administration increments the size of your checks. The magnitudes of these increments depend on your current age and full retirement age (FRA), primarily ranging between 66 and 67 for individuals yet to retire.
The table below highlights the escalation of Social Security checks over time for the two most common FRAs: 66 and 67.
5/9 of 1% per month (6.67% per year) from:
| Social Security Checks Escalate by: | FRA of 66 | FRA of 67 || --- | --- | --- || 5/12 of 1% per month (5% per year) from: | 62 to 63 | 62 to 64 || 5/9 of 1% per month (6.67% per year) from: | 63 to 66 | 64 to 67 || 2/3 of 1% per month (8% per year) from: | 66 to 70 | 67 to 70 |
63 to 66
Postponing application for a single month could enhance the standard $1,915 Social Security benefit (as of April 2024) by $8 to $13 per month. Delaying until you're 70 could swell your monthly benefit by hundreds of dollars, provided you're financially stable enough to endure this wait.
64 to 67
While we cannot predict our lifespan with certainty, you might discern a rough estimate based on your personal and family health histories. The typical 62-year-old man today may live until approximately 83.6, whereas the female counterpart is anticipated to reach 86.4.
67 to 70
To determine which claiming age offers the highest overall return, estimate the lifetime benefit each claiming age could provide. Begin by creating a my Social Security account – if you haven't already done so – after which you'll be able to access a tool that offers an estimate of your Social Security benefits at any selected claiming age supported by your work history to date. You can also adjust the projected future income estimates supporting the figures it provides.
2/3 of 1% per month (8% per year) from:
Select a few potential claiming ages and multiply the monthly benefits from each by 12 to calculate your estimated annual benefit. For example, a $2,000 monthly benefit translates to a $24,000 annual benefit. Then, multiply this figure by the number of years you envision claiming Social Security. With a $24,000 benefit for 20 years, this amounts to a $480,000 lifetime benefit. Delay your application to the age offering the highest lifetime benefit whenever possible if you can afford to wait that long.
66 to 70
- In considering your financial situation at 62, if you have substantial savings or a stable income, you might choose to delay claiming Social Security to ensure the highest lifetime benefit, despite the initial financial hardships.
- As you plan your Social Security claims, it's crucial to factor in your expected life span. If you anticipate living past 80, delaying your application until your maximum benefit at 70 could significantly increase your monthly checks.