In most situations, waiting to claim Social Security is the smart choice. Delaying your benefits claim until age 70 allows you to max out the monthly income that you get from the program.
Since benefits are protected against the full effects of inflation and guaranteed to last as long as you do, maxing them out often makes good sense. That's especially true since the majority of retirees will get more lifetime retirement income with a delayed claim.
However, there are three situations in which you shouldn't delay your benefits any longer, and instead should seriously consider filing now to get those checks coming. Here's what they are.
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1. Your savings are running out
If you are living on your savings because you aren't working anymore and you're seeing your account balance dwindle, you need to act quickly. You don't ever want to take so much money out of your 401(k) or other retirement plan that you drain the account dry. You probably can't live on Social Security alone.
You are far better off starting Social Security right away and cutting down the amount you take out of savings to a safe withdrawal rate (usually 4% or less of your account balance). This way, you can preserve your multiple income streams and hopefully bring in enough money with both funding sources.
2. Your higher-earning spouse will claim benefits to help you make ends meet
If your spouse has a higher career income and is considering starting Social Security checks because your household needs some extra cash, it's almost always better for you -- the lower earner -- to begin getting your benefits first to enable your spouse to delay.
Early filing penalties that apply to Social Security claims are applied to your benefits on a percentage basis if you claim before full retirement age (FRA). So are delayed retirement credits that increase your standard benefit if you delay claiming after FRA until 70. The partner who earns more money will have a bigger standard benefit. It's smart to avoid these penalties and earn these credits on the bigger benefit.
If you can claim your own checks, and by doing so, enable your spouse to wait, your household will ultimately end up with much more money coming in once your spouse eventually files for benefits. Not only that, but when your higher-earning spouse delays claiming, that increases survivor benefits if you outlive your partner.
You also qualify for spousal benefits when your spouse begins claiming checks. If spousal benefits are higher than your retirement benefit, you'll switch to them at that time, so it doesn't really matter if your own retirement benefits have shrunken due to an early claim.
For all these reasons, it's a no-brainer to start your own checks if doing so makes it possible for your higher-earning spouse to wait.
3. You're ready to retire but need Social Security to make it happen
Lastly, if you have a good amount of savings and are in a position to retire but need Social Security to do it, you might want to go ahead and claim those benefits now. Sure, you could wait and increase them, but there's no guarantee you'll live long enough to break even for the delay -- or be as healthy and happy in a few years as you are now.
Why force yourself to work for extra years if you're ready and able to retire and want to do so, just to increase Social Security checks in the hope it will result in a little more lifetime income if you outlive your life expectancy? It could be better to seize the day and start enjoying retirement.
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