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The most popular age to file for Social Security is 62, and the majority of Americans file for benefits before their full retirement age -- which is 66 for people retiring now and increases to 67 for workers born in 1960 or later.
Deciding when you should claim Social Security is important, because your benefit check will grow for every month you delay benefits from age 62 to age 70. At your full retirement age, you're eligible for your full Social Security retirement benefits, also known as your primary insurance amount.Yet there are some good reasons to forget about your full retirement age and file at an earlier -- or later -- date.
1. You need the money now
The most obvious situation in which it doesn't make sense to wait until full retirement age is when you need the income earlier. Many people leave their jobs well before age 67, and not always because they planned to do so. Unfortunately, health problems and corporate downsizing force many older Americans to leave their jobs earlier than they had planned to.
In fact, a survey by the Employee Benefit Research Institute found that 49% of retirees stopped working earlier than they planned. 61% of this group cited health reasons, while many others said they were downsized or they retired to care for a spouse or other family member.
While a permanently higher benefit check would certainly be nice, it's simply not practical for all Americans to delay Social Security.
2. You aren't ready to retire
On the other hand, many people at full retirement age simply aren't ready to leave their jobs yet. And while there's no financial reason to delay Social Security past age 70, there can be a large financial payoff to waiting a few years beyond full retirement age to start collecting benefits.
Specifically, for each year beyond full retirement age, you'll get an 8% delayed-retirement credit. In other words, your retirement benefit will be permanently increased for each year you choose to delay retirement, up until age 70. For example, let's say your benefit at age 67 is projected to be $1,500 per month. Here's how waiting to file could affect your monthly income:
You can seeyour projected full retirement benefit by creating an account at www.ssa.govand viewing your most recent Social Security statement, and from this information, you can determine how a late retirement would affect you.
3. It's all the same (theoretically)
It's also worth mentioning that Social Security is designed to pay you about the same amount in total lifetime benefits no matter when you claim. If you claim earlier, then you'll get more checks, but they will be smaller. If you claim later, you'll get fewer checks, but they'll be larger. If you live to the average life expectancy of your peer group, then it all evens out.
This is all theoretical and based on the Social Security Administration's actuarial tables.Today's average 62-year-old is expected to live (and therefore draw Social Security) for another 21.3 years. A 67-year-old is expected to live another 17.4 years, while a 70-year-old filer can be expected to receive benefits for about 15.2 years. Accounting for prospective cost-of-living adjustments in future years, all three of these situations is expected to produce the exact same cumulative amount of benefits.
In short, it's a misconception that waiting until full retirement age guarantees that you'll get more Social Security money over your lifetime. Theoretically, it's all the same, so if you want to file at 62, don't let the worry of lower lifetime benefits stop you.
4. You're in poor (or excellent) health
As I just mentioned, it's important to emphasize that theoretically, your lifetime benefits will be the same no matter when you claim. However, nobody knows your own health better than you (and your doctors), so this information should be taken into account when deciding when to file for Social Security.
Even if you're working, if you're approaching the age of 62 and you're not in great health -- say you have heart problems, for example -- then it may be in your financial best interest to file as early as possible. On the other hand, if you're in excellent health and have a history of longevity in your family, then you may reap higher lifetime benefits by waiting until age 67 or beyond to file.
5. If your spouse and/or kids are eligible for benefits
If you have dependent children, then it might make financial sense to start taking benefits as soon as possible. If your child is under 18 and unmarried, 18 to 19 and a full-time student, or over 18 and disabled, then they may be entitled to collect their own benefit of up to half of your Social Security retirement benefit.
On top of this, your spouse may be able to collect a benefit regardless of their age if they care for your child who is under 16 years old. The total benefit that can be paid out on your record is limited to 150%-180% of your benefit, but this could potentially result in a larger financial benefit than waiting until full retirement age. Therefore, if you have children, this option is definitely worth considering.
Full retirement age is just a number
The bottom line is that everyone's situation is different, and your full Social Security retirement age is a somewhat arbitrary number used as a basis for your Social Security benefit. You have an eight-year window in which you can choose to file for Social Security, so it's important to assess your personal situation in order to make the best decision for you and your family.
The article Social Security: 5 Reasons Not to File for Benefits at 67 originally appeared on Fool.com.
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