The Optimal Time for Social Security Claims: Why Age 67 is the Golden Mean

The social security authorities offer a flexible range of options for applying for benefits. Citizens can assert their claims starting at age 62, with the possibility to submit an application at any point thereafter. While there is no financial incentive to delay the application beyond the age of 70, individual preferences and situations can influence the best timing until then. For instance, those who want to claim both social security benefits and Medicare at age 65 can do so. Similarly, one might choose the age of 64 to retire simultaneously with a spouse. However, the decision for the optimal timing can be complicated, as each option has its pros and cons. For those who are undecided, waiting until age 67 might be a pragmatic solution. For individuals born in 1960 or later, age 67 is the so-called full retirement age. At this point, one is entitled to the full monthly social security benefits based on their individual earnings history. Applying earlier results in reduced benefits, while applying later increases the monthly payments. The risk of applying for social security benefits too early lies not only in receiving less per month but also potentially earning less total income over a lifetime. On the other hand, applying at age 70 results in higher monthly payments but carries the risk of receiving less overall benefits in the event of an early death. At age 67, one has a balanced opportunity to avoid monthly reductions in social security payments and not have waited too long. For those in average health, 67 could be the age at which one is most likely to achieve a balanced outcome. Although various reasons can argue for different ages between 62 and 70, age 67 offers a secure compromise. It reduces the likelihood of making a suboptimal decision that could result in less lifetime income. Especially given that many Americans are behind in their retirement planning, careful strategies to maximize social security benefits can make a significant difference. A small but wise approach can help substantially improve retirement income, thus facilitating a worry-free retirement.