When to Claim Social Security? The Only 3 Strategies I Recommend.

Few decisions are as important in retirement planning as when to claim Social Security. Claiming too early or waiting too long to start could leave valuable benefits on the table. While everyone's situation is different, I think nearly everyone will find one of the following three strategies will fit their needs and help them maximize their Social Security benefits.

Here are the only three strategies I recommend.

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1. Claim as soon as possible

There are two groups of retirees who should consider claiming some form of Social Security benefits as soon as they become eligible.

The first group is lower-earning spouses. For couples with average life expectancies and relatively similar ages, most households will maximize their total income from Social Security over their combined lifetime if the lower-earning spouse claims benefits as soon as they're eligible. That means receiving benefits starting at age 62 and 1 month.

The reason this strategy works for a household is that the lower-earning spouse will be eligible for survivor benefits if the higher-earning spouse passes away before them. That will automatically increase his or her monthly payment to be equal to the higher-earning spouse's. However, if both spouses live well into their 80s, claiming as early as possible will result in the household receiving less than if the lower-earning spouse delayed benefits.

The second group of retirees who should claim early are those eligible for survivor benefits before retiring. If you were married at least nine months before your spouse's death (or 10 years for a divorced spouse) and haven't remarried, you can claim survivor benefits as early as age 60.

When you claim survivor benefits, you can allow your personal benefit to continue increasing. That means you can start benefits at age 60 (or whenever you become eligible for survivor benefits), and then let your personal benefit keep growing until age 70, and then switch. Alternatively, you can claim your personal benefit at age 62 (or as soon as you become eligible for survivor benefits), and let your survivor benefit continue increasing. You'll have to do some math to determine which method works best for your situation.

2. Full retirement age

Full retirement age plays an important role in Social Security. While it affects many rules, one of the most important for maximizing benefits is that it's when spousal and survivor benefits max out. While personal benefits will continue to increase for each month you delay up until age 70, there's very limited value in delaying benefits beyond full retirement age for anyone planning to collect spousal or survivor benefits.

Surviving spouses who claimed their personal benefit earlier can switch to survivor benefits when they reach full retirement age to collect more from Social Security every month.

Lower-earning spouses who want to protect against living a longer-than-average life should consider claiming at full retirement age if their potential spousal benefit is nearly as much as or more than what their personal benefit could grow to by age 70. It might not be worth delaying benefits beyond full retirement age just to receive a few more dollars per month thanks to delayed retirement credits.

3. 70 years old

Once you hit age 70, your Social Security payment stops accumulating monthly increases. The only bump your payments will receive comes from the annual cost-of-living adjustment (COLA). As such, it rarely makes sense for anyone to wait past age 70 to start receiving Social Security.

Higher-earning spouses and unmarried individuals are best off if they can delay benefits all the way until age 70. Not only will that maximize their personal monthly payment, but it also ensures that the lower-earning spouse receives the maximum possible survivor benefit if the higher-earning spouse passes away first. As such, the odds heavily favor higher-earning spouses waiting until age 70 to maximize the lifetime household income received from Social Security.

Lower-earning spouses who are more worried about living well past the average life expectancy may also benefit from delaying until age 70. The math for whether it makes sense to delay benefits or take them early says you'll have to live until your mid-80s to make delaying until age 70 worthwhile. As such, it makes sense for older spouses who were lower earners to delay until 70 in some cases, particularly when both spouses seem to have many healthy years ahead of them.

The best claiming strategy for you will depend on a variety of factors, including your personal finances, health, and marital status. One of the above strategies is likely a good fit for you, or can at least provide an excellent starting point for thinking about when to claim Social Security.

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