What Are The Key Factors For When Should I Claim Social Security?

"What's the right age to claim Social Security? A Reddit user who has been considering this issue said recently that when you make this decision, you are playing in Las Vegas\" against the government. While it may seem like a strange metaphor, the original poster was trying to make the point that the government thinks it knows when someone will die and has used this information to create a system of early filing penalties and delayed retirement credits. The goal of this system is to try to make sure those who claim Social Security early get the same lifetime benefits as those who claim Social Security late."

"The most important factor that should shape your Social Security claim is whether you think you will live long enough to break even if you delay. You can make an educated guess about whether or not that will happen by calculating your break-even point. Here's how: Determine what your Social Security benefit will be at different claiming ages. For example, if your standard benefit is $1,900 and you are deciding between claiming at 62 or claiming at 70, you'd need to determine how much the $1,900 would be reduced or increased at each age."

The government applies early filing penalties and delayed retirement credits to equalize expected lifetime Social Security benefits across claiming ages. Calculating a break-even point reveals whether delaying will likely produce higher lifetime benefits given personal longevity. Determine benefits at each claiming age using an SSA account or manual calculations to compare reduced versus increased monthly payments. Consider health, family longevity, current financial needs, spousal and survivor implications, and tax interactions when choosing a claiming age. Early claiming increases immediate cash flow while delaying raises monthly and survivor benefits but risks fewer total lifetime dollars if life expectancy is shorter.

Read at 24/7 Wall St.