These Are the Questions You Need to Ask Before Claiming Social Security

One of the most significant financial decisions you might have to make in retirement, or leading up to it, is when to file for Social Security.

You’re eligible to get your monthly benefit without a reduction at full retirement age (FRA). But if you sign up after FRA, you’ll boost your benefits by 8% for each year you hold off, until you turn 70.

You can also sign up for Social Security before reaching FRA. Those benefits are yours to collect once you turn 62. But you should know that signing up early will slash your benefits for life.

Because your claiming decision carries a lot of weight, it’s important to put a lot of thought into it. And you should also ask yourself these essential questions before signing up.

1. How much annual income can I get from my savings?

Retirement plan balances can be misleading. You might log into your IRA or 401(k) and see that you’ve got $1.2 million socked away. And while that is a large amount of money, you have to remember that that pile of cash might need to last for 25 or 30 years — or more.

So before you claim Social Security, run some numbers to see how much annual income you can expect out of your savings. That should tell you how much Social Security you’ll need to make up the difference.

Say you have $1.2 million saved and you decide you’ll withdraw 4% per year. That gives you $48,000 to live on annually. From there, you can estimate your retirement costs, see how much Social Security you’ll need to supplement your savings, and land on the right filing age accordingly.

2. Am I likely to live a long life?

Delaying Social Security can make a lot of sense for people with a generous life expectancy. People with poor health going into retirement, on the other hand, should consider filing early or on time to maximize their lifetime income.

Before you take benefits, think about how healthy you are. And do keep in mind that some health conditions can improve with proper diet, exercise, and self-care — things you may not have had time for prior to retirement.

But all told, if you have doubts about living a longer life, you may want to sign up early or on time. Despite getting less money on a monthly basis, it might give you more lifetime Social Security income.

3. Do I have a spouse who will rely on survivor benefits?

Survivor benefits can become a crucial source of income for seniors whose spouses pass away. If you were the higher earner in your household, and you’re also a bit older than your spouse, they may be reliant on your Social Security benefits to stay afloat. So it’s important to set them up with a decent monthly paycheck upon your passing.

For this reason, you may want to lean toward filing for Social Security at or after FRA if you have a spouse you want to take care of. But have that conversation with them so they’re part of the decision.

And while you’re at it, talk things through with a financial advisor. They can help you better understand the pros, cons, and implications of filing for Social Security at various ages.