The best age is usually later, not sooner. New retirees are leaving tens of thousands (often, hundreds of thousands) of dollars on the table by taking benefits too soon.
You can take retirement benefits as early as age 62. But your check, today, will be reduced by 25 percent — a reduction that chops your future income permanently. If you wait until 66 (currently, the full retirement age), you’ll receive your full benefit, known as your “primary insured amount.”
It gets even better, if you can put off retiring until 70. For each year you wait, between 66 and 70, your Social Security benefit builds by a guaranteed 8 percent a year, plus a cost of living allowance.
If you’re married, the case for waiting becomes even more compelling. If you die first, your spouse normally gets up to half of your retirement benefit. The later you retire, and the larger your benefit, the more income you’ll leave for the spouse who survived you.
Sometimes, you have no option but to take Social Security at 62 because you need the money to pay the bills. But is there really no option? Can you put off claiming benefits by working longer or temporarily dipping into savings?
You might have a “take it and run” mentality. You’d feel rooked if you delayed claiming Social Security and died just a few years later. But, excuse me, if that happened you wouldn’t be thinking much about your personal finances.
Your biggest risk isn’t dying too soon, it’s living too long and running out of money, or leaving too little income behind for your spouse. So bet on life, not death, and take Social Security at a later age.