The age at which you file for Social Security can have a profound effect on the types of benefits that you receive. While eligible to file at age 62, unless it is financially necessary, waiting to take advantage of these benefits can make retirement a much better experience.
For those waiting to file, three important points come under consideration.
Still Working into Retirement Age
If you are still working into your retirement age, waiting to file for Social Security may be your best option. Those that have another income coming in besides Social Security face up to an 85% taxation of benefits. Once you decided to start claiming them, the benefits lock in.
Delaying benefits can be helpful for those that have no- or low-income years on their record. Social Security looks at the highest earning 35 years of a person's wages, and if working a few years can help benefits can be locked in higher, it is a good option to consider.
As long as the job you are currently working can cover all expenses, waiting may greatly help. Each year after 62 and up to age 70 that you do not claim Social Security for will add 8% to the total benefit amount.
Anticipating a Very Long Retirement
While it is impossible to determine how long your retirement could potentially last, waiting to collect Social Security could have a greater lifetime payout. Waiting until the age of 70 to collect benefits means that there is a higher monthly payout, with a potential higher lifetime payout.
It is helpful to consider family history and personal health when deciding when to collect. For those that live longer, it may be helpful to have that extra income when considering help that may be necessary for daily activities later in life.
Making Your Social Security Count
Pensions, Social Security, and personal investments will make up the income you earn in your retirement. Social Security can work as an investments since this is money you don't have to use in order to cover living expenses.
What you need to keep in mind when deciding when to collect Social Security is how this will impact the rest of your life. The longer you wait to collect means the longer you will need to work or rely on other sources of income. In the case of your death, any money that Social Security would have paid to you gets recycled into Social Security and is not paid out to any heirs. Finally, considering health is important. A larger payout may not be worth it if you are unable to enjoy it due to health restrictions or other issues that may require having financial support sooner.