Financial experts and planners often tout the outsized benefits of waiting as long as possible before filing for Social Security. But there are other experts who contend that if one has lingering health issues, it’s probably best to collect at sixty-two years old, the earliest age possible. Then there are those who take a Goldilocks approach and claim that somewhere in the middle—perhaps age sixty-five—is the best answer.

As pointed out by personal finance expert Maurie Backman at The Motley Fool, “the monthly benefit you’re entitled to from Social Security will be based on your personal earnings history.” She goes on to mention that “you can collect that benefit in full once you reach full retirement age, or FRA.”

However, “if you claim Social Security before FRA, your monthly benefit gets reduced on a permanent basis,” Backman writes. “Delay your filing past FRA, and your benefit gets a boost that stays with you for the rest of your life. Once you turn seventy, you can’t grow your benefit anymore, though, which is why that’s generally considered the latest age to file.”

A 30 Percent Cut

But signing up for benefits at age sixty-two has its own set of problems. “Workers planning for their retirement should be aware that retirement benefits depend on age at retirement,” warns the Social Security Administration. “If a worker begins receiving benefits before his/her normal (or full) retirement age, the worker will receive a reduced benefit. A worker can choose to retire as early as age sixty-two, but doing so may result in a reduction of as much as 30 percent.” 

As a result, Backman advises keeping age sixty-five in mind when deciding on what age to start collecting benefits. “While you’ll lose a portion of your monthly benefit due to signing up before FRA, you won’t face nearly as extreme a hit as you would by filing at age 62,” she contends. “Just as importantly, you won’t have to wait too long to get your money. If you’ve saved nicely for retirement but need some income from Social Security to manage in the absence of a job, filing at age 65 could make it possible to enjoy your newfound freedom—before health issues start to arise,” she adds.

No One-Size-Fits-All Answer

However, Backman warned that this shouldn’t be seen as a one-size-fits-all approach. “Not everyone should sign up for Social Security at age sixty-five,” she says. “If you are nearing retirement with little to no money in your nest egg, then you’ll probably want to wait until FRA or even later to file for benefits. But if you’re approaching your senior years in a reasonably strong financial spot and want to leave your career behind in your mid-60s, then claiming Social Security at sixty-five could end up working out well for you.”

Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.