The Social Security Claiming Age Nobody Talks About - And Why It Might Be Your Best Option

There are many retirees today who are living on just Social Security. And if you expect those benefits to play a big role in your retirement income, filing at the right time is crucial.

You have many choices when it comes to claiming Social Security. The earliest age you can start collecting benefits is 62. And while there's technically no such thing as a "final" age to sign up for Social Security, there's no financial incentive to delay your claim past age 70. As such, 70 is often talked about as the "latest" Social Security claiming age.

But while 62 and 70 may be popular ages for claiming Social Security, there's another option you may want to consider.

How Social Security benefits are calculated

Your monthly Social Security benefit in retirement depends on two factors. The first is the amount of money you earned during your career. The second is your filing age.

If you file for Social Security at full retirement age (FRA), you'll get your exact monthly benefit based on your personal earnings history. But if you file for Social Security before FRA, your benefits will get reduced. Meanwhile, if you delay your claim past FRA, your benefits will increase 8% for each year you wait, until you turn 70.

Why claiming Social Security at 67 could make sense

If you were born in 1960 or later, your FRA for Social Security purposes is 67. At that age, you won't be looking at reduced benefits like you would by filing at 62. But you also won't have to wait so long to start getting your monthly checks.

Claiming Social Security at 62 results in a 30% reduction in benefits compared to filing at 67. Waiting until 70 results in a 24% increase.

Both of these options are tempting because claiming Social Security at 62 gives you that money much earlier, while waiting until 70 gives you much larger checks. But when you think about it, filing at 67 is a nice compromise.

In order to be able to file for Social Security at age 70, many people have to work until age 70. If you do physical labor or have a job with a tough commute, that may not be an easy thing.

Letting yourself off the hook by claiming benefits at 67 may be a better option for your mental and physical health. And since you won't be reducing your benefits, you won't necessarily be bringing a ton of financial stress upon yourself.

How much you could get by claiming Social Security at 62, 67, or 70

Let's say your FRA benefit from Social Security is $2,000. If you file at 62, you'll only get $1,400 a month. If you file at 70, you'll get $2,480 a month.

There's clearly a huge gap between claiming Social Security at 62 versus waiting until 70. In this case, signing up as early as possible means getting $1,080 less per month, or $12,960 less per year.

But the gap between claiming Social Security at 67 versus 70 isn't as substantial. In that case, you're getting $480 less at 67 than at 70, or $5,760 less per year. That's not a negligible amount of money, but it's also a difference you may be able to make up for with the right investment portfolio or if you have enough money saved to pull from.

Factors to consider before claiming benefits at 67

There's really no right or wrong answer when it comes to claiming Social Security. You may want to file for benefits at 67 if:

• You have decent health but don't necessarily expect to live well into your 90s.
• You have some savings to supplement your monthly benefits so that you're not reliant on boosted checks to stay afloat.
• You can manage your job until 67 but think going beyond that point will be too much of a strain.

If you're married, you'll want to consider how claiming Social Security at 67 might impact your spouse. If you're the higher earner and your spouse outlives you, they should get survivor benefits from Social Security equal to what you receive each month. If you file at 67, you're not giving your spouse a reduced benefit or a boosted benefit. They may be fine with that, but it pays to talk things through.

Bottom line

Even if you do your best to save money in retirement, you may find that it's a difficult thing to keep up with all of your expenses. That's why it's important to claim Social Security at the right time.

Social Security may be your biggest retirement income source even if you have decent savings. So while you don't want to claim benefits too early and risk slashing them in the process, waiting too long isn't necessarily optimal, either.

Filing for Social Security at 67 is a compromise worth considering. You're not signing up early or late, and you're therefore not waiting too long to get the money you earned after years of hard work. So if you don't like the idea of reduced benefits but can't picture yourself working until age 70, you may decide that claiming at 67 is the right call.

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