Social Security at 62 vs. 70: The Lifestyle Question Many People Miss
Claiming Social Security at the earliest age you can, 62, offers you immediate income. But because you can get higher benefits if you wait to start receiving benefits, many retirees have a hard time deciding when to tap Social Security.
While finances and budget are often the focus, it’s also important to assess what type of lifestyle you want to have in retirement.
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Why waiting pays more
The longer you wait until age 70, the more you will receive per month in Social Security benefits. Claiming at 62 can mean taking a 30% cut in Social Security benefits compared to if you tapped into benefits upon reaching full retirement age, which is 66 or 67. Meanwhile, waiting until age 70 allows you to receive the maximum benefit.
It pays to wait if you don’t need the money right away. A higher payout when you turn 70 can provide more financial flexibility when you need it the most. Delaying when you claim Social Security can be especially advantageous for people with good health and a family history of longevity. However, the decision about when to claim Social Security will come down to several factors — and the right choice for one retiree may not be the best for another.
The lifestyle question people miss
If you only look at a spreadsheet of your finances, it often makes sense to delay Social Security until you reach 70. However, there are some other key factors to consider before making your decision. Some people can’t continue working until they reach 70 because they are in physically demanding jobs. Taking out Social Security can preserve their health and make it financially feasible for them to work part-time hours instead of maintaining a grueling full-time schedule.
Caregivers also may not have the time to work full-time hours, and may need the extra income sooner. Taking out Social Security early can provide more flexibility. Be sure to consider lifestyle factors like these when making your decision about when to claim.
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How health, savings and spouses factor in
If your spouse earned less money than you, it may make even more sense to delay Social Security benefits. That’s because a spouse’s survivor benefit is equal to their current benefit or the deceased spouse’s former benefit, depending on which number is higher.
Delaying Social Security for your spouse can be a good move if you were the higher earner, but that intention may face some challenges if you don’t have enough money to cover your essentials. Many retirees use their 401(k) accounts, individual retirement accounts (IRAs) and other savings and investments as a bridge to fund their mid-60s so they can tap into Social Security benefits at 70. People who do not have that option may have to take out Social Security early to keep up with living expenses.
The best claiming age is different for each person. It comes down to your financial situation and lifestyle. Some people need to retire early for health reasons, and Social Security provides immediate cash for people who are operating under tight budgets. The best claiming age for you may be 62, 70 or somewhere in between.