For Americans who have stored away a great deal of money through prudent saving and investments in 401(k) plans and Roth IRAs, their Social Security payments may not matter significantly. However, for many millions of Americans who rely heavily on the payments, the decision of when to file can be a vitally important one.
Most financial planners advise retirement savers to hold off on filing for Social Security for as long as possible, generally until the age of seventy. Doing so promises them considerably higher payments, which pay for themselves over a period of around fifteen years. Conversely, it is usually considered a bad move to immediately file for benefits at age sixty-two, the youngest possible age, because doing so will severely hamper a person’s benefit levels for the rest of their life. Another advantage to waiting is that a higher level of benefits can be passed on to a person’s spouse, possibly securing a comfortable retirement for them as well.
However, there are a few possible situations in which the best move might be to claim benefits as quickly as possible. The most important of these concerns is a person’s anticipated retirement. If they do not intend to continue working until age seventy before claiming benefits, and cannot pay for the wait through saved money, then it is unavoidable that a person could claim benefits earlier. Also, there is the chance that a person would have to stop working due to health issues, such as the ongoing coronavirus pandemic.
Alternatively, a person might be forced into a caregiving role for their family members, as many retirees are prone to do. As a caregiver, one typically cannot work, meaning that a Social Security check could become an economic necessity. At-home caregiving has become particularly important since the onset of the pandemic, which has prevented live-in caregivers from working and has seriously affected nursing homes in many states.
Finally, if one has some reason to expect they might not reach old age, such as a chronic medical condition or a family history of illness, it might be a good idea to claim the payment early and try to retire as early as possible.
Of course, most people do not think about Social Security in this way. They simply want to retire as comfortably as possible, and in many cases, that means waiting until Social Security’s Full Retirement Age, usually sixty-six or sixty-seven, to claim payments. In a few situations, though, collecting quickly might be more useful.
Trevor Filseth is a current and foreign affairs writer for the National Interest.