Social Security When?

WHEN SHOULD YOU CLAIM your Social Security benefit? Ignore all the “wisdom” you’ve heard from family and friends.

Instead, start with this advice: Don’t assume that the best strategy is to claim benefits at the earliest possible age, which is 62, or that the right strategy is to claim as soon as you quit the workforce. Similarly, don’t assume that you should claim benefits early because that’s when you’ll enjoy the money the most or when your retirement spending will be at its highest. And don’t assume that you’ll be better off claiming benefits early and then investing the money. These are all dangerous assumptions.

The fact is, when you claim benefits is perhaps the most important financial decision you’ll make in your 60s, and you don’t want to get it badly wrong. For many retirees, the prudent strategy is to delay benefits to get a bigger monthly check, while using savings to pay for the early retirement years.

Why is that? Social Security benefits are arguably a retiree’s most valuable financial resource. It’s an income stream that’s backed by the federal government, indexed to inflation, guaranteed for life and at least partially tax-free, and that income stream could potentially live on after your death as a survivor benefit for your spouse and children. Think of Social Security as insurance against the risk you live longer than you ever expected. Sure, you might imagine you’d enjoy your Social Security benefits more in your early 60s. But there’s a good chance you’ll feel differently in your 80s, when your nest egg might be depleted and your financial comfort hinges on the size of your monthly government check.

That said, not everybody should delay benefits until their late 60s and perhaps all the way to age 70, which would give you the largest possible monthly benefit. If you’re single and in poor health, or you’re married and both you and your spouse have a short life expectancy, claiming at age 62 might be the right choice. It can also be smart to claim benefits early if you have children who are school-age or younger because you may qualify for family benefits.

What if you’re in poor health, but your spouse isn’t? If you were the main breadwinner, it can still be worth delaying benefits—because the resulting larger monthly benefit will likely become your spouse’s survivor benefit. Want to take a closer look at the issue? Check out the Social Security calculator created by blogger Mike Piper.

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