Does It Make Sense to File Early for Social Security?

It may seem strange to some that this question should even be posed. After all, the conventional wisdom, which most of us have heard over and over, is “The later the better; wait until you’re 70 if you can, to get the maximum monthly benefit.”

Certainly, there’s a reason why this is the conventional wisdom. After all, it is true that the longer you wait after becoming eligible to begin receiving Social Security payments (currently, age 62), the larger your monthly paycheck from the government.

On the other hand, for certain people, there can be compelling reasons to consider drawing Social Security as soon as they become eligible. Let’s take a look at some scenarios when it may make sense to file early.

  • You are in poor health. Life expectancy following retirement is probably the number-one variable that we must contend with when helping people plan for retirement. If your health is poor, filing earlier for Social Security benefits may be a wise choice. Even if you file at the earliest possible time, at age 62, you are still eligible to receive 75 percent of your full benefit, and that extra monthly payment can make your life much easier, especially if you have other assets with which to supplement your income. But before committing, you might wish to have a frank discussion with your physician. A 2015 study by Stanford University researchers indicated that two-thirds of retirees who claimed early actually had enough assets to be able to wait two years or more before beginning Social Security payments. If your health is not great but also not dire, it could still make sense for you to wait until age 64 or 65.
  • Your spouse is ten to twelve years older than you. In this situation, claiming early, especially if you have significantly lower earnings, can put you ahead in certain circumstances. According to Baylor University’s Bill Reichenstein, if, for example, you are a woman who is twelve years younger than your spouse, and he waits until age 70 to begin claiming benefits, you might consider claiming at age 62. It would take you until about age 78 (when your husband is 90) before the money you would have received by delaying your payment would exceed what you received by filing earlier. Given the time value of money, collecting for a longer period of time is better than waiting for the bigger payments. And if, as is statistically likely, your husband predeceases you, you’d be able to switch to a survivor benefit equal to his monthly payment.
  • You have qualifying dependent children. When you file, your qualifying dependent children may also qualify for payments. This one can be complicated, so do the math carefully, and you may also want to consult with a qualified advisor. But in some cases, this can be a win-win strategy.

In all these scenarios, of course, it is always best to seek the advice of a qualified financial professional who is familiar with your situation and other resources. Remember though: later isn’t always better.

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