Chances are, Social Security will be a major income source for you in retirement, which is why the decision to file shouldn't be taken lightly. Eligible seniors get eight-year window to claim benefits that start at age 62 and end at age 70 (technically, you're not forced to file by 70, but there's no financial reason to wait that point). Smack in the middle of which window is full retirement age, or FRA, which is the age at which you are entitled to the full monthly benefit your earnings history entitles you to. Year of Birth
66 and 2 months
66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months
67  DATA SOURCE: SOCIAL SECURITY ADMINISTRATION
Many seniors prefer not to wait until FRA to claim benefits, and instead file as early as possible at age 62. Doing so, however, causes a reduction in benefits. In fact, for each month you file ahead of FRA, your benefits take a small hit. File well before FRA, and those benefits will take a pretty big hit – 30%, in fact, if you claim Social Security at 62 with an FRA of 67.
Clearly, the age at which you sign up for Social Security will dictate how much monthly income you collect in retirement. As such, be sure to keep the following factors in mind when making that decision.
1. Your Earnings level
You are allowed to collect and receive Social Security benefits at the same time. But unless you already got there, doing so will reduce your benefits in two ways.
First, you'll be hit with the general reduction that comes into play when filing before FRA. Secondly, if your earnings exceed a certain level, you will have a portion of your benefits with a result (though not permanently – they will be added back to your monthly payments once you reach FRA). For the current year, that second part comes into play if your earnings exceed $ 17,640. If you reach FRA later in the year, that earning limit is higher – $ 46,920. Therefore, unless you really need the money from Social Security right away, it might be necessary to rely on your regular paycheck and grow your benefits.
2. Your savings level
Social Security was never designed to sustain retirees by itself. That's why workers are encouraged to build independent savings to ensure they have enough money to pay the bills once they stop working. Many Americans, however, have a poor job or saving for the future, and thus enter retirement with little money. If you're one of them, then you'll probably depend quite heavily on Social Security once your career comes to a close. And if that's the case, it means you should make every effort to file as late as possible. That way, you will grow your benefits and secure the highest possible monthly payment based on your earnings record.
3. Your health
One interesting thing about Social Security is that it's designed to pay you the same total lifetime benefit (meaning, total of all your monthly payments) regardless of when you file. Here's how that works, in theory: Say your FRA is 67, but you file for Social Security at 62, thus reducing your monthly payments by 30% but collecting 60 more in your lifetime. Conceivably, those two points should cancel each other out, resulting in a break-even situation.
There's just one catch: You need to live and average life expectancy for that formula to work. If you pass away sooner than the average senior, you will lose out on money at waiting to file, and you will get away with more money in your lifetime by taking benefits as early as possible. And if you pass away later than the average senior, you'll get more out of Social Security by filing as late as possible.
Therefore, you'll need to really evaluate the state of your health when deciding when to claim benefits. Though your health will not be an absolute predictor of when you will ultimately pass, it can give you an indication as to whether or not you are likely to live a long life, and from there, you can decide on the right time to file
Think about your employment status and earnings, your savings level, and how healthy you are before taking the leap and signing up for benefits. You are most likely to be able to claim social security, the more likely you are to land on the right age.