You can apply for Social Security benefits any time between age 62 and 70. Your application age affects the amount of money you receive each month. And because the amount of your check changes depending on when you receive your first payment, your choice of when to start benefits can affect your lifetime income.
It can be hard to decide whether it’s better to claim Social Security as soon as possible — which means you get more checks than the ones that delay, but relegate you to smaller payments — or whether you have to delay to earn larger monthly payments, even if it means receiving fewer checks over your lifetime.
But while this choice can be complicated, there are two circumstances in which a deferred claim will definitely not pay off.
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1. If you are applying for spousal benefits after full retirement age
If your spouse had a higher income than you or if you did not earn enough on your own to receive Social Security retirement benefits, you may decide to apply for spousal benefits. These give you social security income worth up to 50% of the standard main breadwinner benefit.
If you plan to receive spousal benefits, you can increase the amount of money you receive until you reach your own full retirement age (FRA) to claim them. FRA is between 66 years and four months and 67 years old. Applying before this date results in a reduction in benefits due to your checks starting earlier than scheduled.
But while Social Security retirement benefits continue to increase after FRA until age 70, spousal benefits do not. You cannot increase your benefit if you wait beyond full retirement age, so there is absolutely no reason to do so. By delaying, you would simply lose income and not receive larger checks later in exchange for it.
2. If you die before you break even
Waiting beyond age 62 for Social Security increases your monthly benefit. But since you’re delaying your claim for benefits, you’re missing out on any income that could have come from the checks you chose not to receive.
The reason people do this is to bet on ending up with more money later, once they finally start to collect their benefits. Social Security checks go up for every month you delay them past age 62, so retirees who put off claiming benefits are hoping they get so many higher checks that they’ll cover the shortfall and then keep getting extra money on top of that.
Unfortunately, this requires you to live long enough for enough large payments to be made. If you die too soon, you have given up a lot of income that you could have received with nothing to show for. And that can leave you with a lot less money. If you delay your application until age 70, you would have lost all income to which you would have been entitled during the last eight years. If you die at age 71, you wouldn’t be able to catch up on the hundreds of thousands of dollars you would have received over the years if you hadn’t deferred your claim for benefits.
As these two examples show, a deferred application for social security is not always the best choice and can sometimes have a cost. Be sure to think about this before deciding on the best age to file a claim for benefits.