Suze Orman’s Surprising Advice on When to Claim Social Security

For many older Americans, one of the most critical decisions they might make is figuring out when to sign up for Social Security.

A lot of people end up with little to no savings toward the end of their careers. In this situation, Social Security can easily become someone’s only source of retirement income, so it’s important to claim benefits wisely.

As a refresher, the monthly Social Security benefits you’re entitled to in retirement are based on how much money you earned while you were working. But your filing age helps determine whether you get those benefits in full, or whether they’re boosted or reduced.

If you claim Social Security at full retirement age (FRA), you’ll get your exact monthly benefit without a reduction. FRA is 67 for anyone born in 1960 or later.

If you claim Social Security before FRA (and the earliest age to do so is 62), your benefits will be reduced. If you delay your claim past FRA, each year you wait, until age 70, gives your benefits an 8% increase.

Recently, a couple reached out to financial expert Suze Orman asking for guidance on when to claim Social Security. And her advice was surprising.

Don’t rush to claim Social Security — even in poor health

When it comes to claiming Social Security, many experts will say that people in poor health should consider taking benefits on the early side. The reason is that someone with bad health may not live very long. So if they claim Social Security early, they might come away with a larger lifetime payout despite reducing their benefits on a monthly basis.

But when a couple with health issues asked Orman when to claim Social Security, her response was that they shouldn’t rush to sign up for benefits. Rather, she advised them to wait.

Orman’s reasoning was that people with chronic health issues often end up living longer than expected. So in some cases, filing for Social Security early means shorting themselves on lifetime income.

You need to take all of your circumstances into consideration

Of course, health issues can run the gamut from manageable conditions, like high blood pressure, to problems that may be more likely to shorten one’s lifespan. So if you have health problems, it’s important to talk to your doctors about how manageable your issues are — for the sake of your wellbeing and also to be able to claim Social Security strategically.

You should also consider the other aspects of your life when making your claiming decision. Filing for Social Security early might give you more lifetime income. But if you have a younger spouse who’s likely to outlive you, filing early and reducing your benefits could leave your partner with smaller survivor benefits.

Your savings matter, too. If you have very little money saved, you might need larger Social Security benefits in the near term to cover your costs — even if that leaves you with less income in your lifetime.

All told, it’s not easy deciding when to claim Social Security. Orman’s point, however, is that you shouldn’t necessarily file for benefits as early as possible just because your health isn’t the best.