Question: I’m 68, and health issues have forced me to retire from my full-time job. Should I claim Social Security now or use my savings until I’m 70 so I receive a larger benefit amount?
Answer: I’m sorry to hear about your health problems. It’s hard to imagine when you’re younger that poor health might sideline your work, but if it happens, you’ll need to rethink your retirement plan.
A 2024 MassMutual survey aptly captured this dilemma, finding that 25% of respondents had to retire earlier than they had planned due to illness or injury. The survey also showed that, on average, respondents believe that age 63 is the optimal time to retire, although some people may be inclined to continue working for much longer.
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There can be benefits to spending more time in the labor force. Oregon State University research found that working past age 65 could lead to a longer life. And health benefits aside, extending your career could allow you to boost your savings or better stretch whatever money you’ve accumulated so far.
However, there’s another massive benefit to working longer — giving yourself the option to delay Social Security for larger monthly checks. It’s an option you may be hoping to exercise.
But what if, at age 68, you can no longer work full-time due to health issues? That could derail plans you may have had to claim Social Security at age 70.
You may be tempted to live off of savings for a couple of years to stick to your original plan. But is that a smart idea? Maybe.
How Social Security’s delayed retirement credits work
Once you turn 62, you can file for Social Security benefits at any time. Waiting until full retirement age, which is 67 for folks born in 1960 or later, ensures that your monthly benefits aren’t reduced. Those benefits themselves are calculated based on your 35 highest-paid years in the labor force, using a specific formula that adjusts earlier wages for inflation.
For each year you delay Social Security beyond full retirement age, you accrue delayed retirement credits that boost your benefits by 8%. Those credits stop accumulating at 70, which is why there’s no sense in delaying Social Security benefits past that point.
You essentially have an eight-year window to claim Social Security, from 62 to 70, also known as the 8-year rule of Social Security.
To delay or not — that is the question
Since Social Security benefits are guaranteed for life, it can be tempting to chase the highest monthly paycheck. But if you’re unable to extend your work years to age 70, you may find that living off of savings for even a couple of years is a challenge — namely, because you don’t want to put your nest egg at risk of getting depleted.
Tom Buckingham, Chief Growth Officer at Nassau Financial Group, says, “If health issues force early retirement, claiming Social Security now rather than waiting can be a smart choice. It provides immediate income, reduces reliance on savings, and avoids the risk of delaying for benefits that may never be realized due to shortened lifespan.”
As he explains, claiming Social Security at 70 does mean receiving more money each month, but you’ll also get fewer individual benefit payments than if you were to file at 68. Depending on the nature of your health issues, it may be beneficial to receive the money sooner rather than wait, as delaying until 70 could result in receiving less Social Security over the course of your lifetime.
However, health issues that force an earlier retirement than expected aren’t always detrimental on a long-term basis.
As Buckingham says, “If health issues force early retirement but aren’t expected to shorten one’s lifespan, it may make sense to delay claiming Social Security if you have sufficient assets to cover interim expenses and provide a cushion for future healthcare needs in retirement.”
Buckingham points out that filing for Social Security at 68 would result in a monthly benefit approximately 14% lower than it would be at age 70. Whether that results in less lifetime income, however, depends on your lifespan — something you can’t predict. You’ll need to consider the nature of your health issues and think about the long-term impact you expect them to have.
Krisstin Petersmarck, President and Founder of New Horizon Retirement Solutions, agrees that you may need to bust out your crystal ball and try to determine whether your current health issues will have a long-term impact.
“If longevity is not a concern, then it could make the most sense to claim Social Security now,” she says.
But Petersmarck also says it’s important to think about how much money you have saved, and how much income your portfolio can likely generate in the near term.
“Because the market is doing well and expected to end the year staying in bull market territory, along with interest rates slowly coming down, can they create enough growth in their investments to delay claiming Social Security? Right now, even conservative risk profiles are performing quite well, which might be enough to provide the needed income.”
A decision you don’t have to make alone
Deciding whether to claim Social Security now versus two years later can seem like a gamble in the absence of knowing how long you’ll be around to collect those benefits. That’s why Petersmarck suggests not making that call on your own.
“Ultimately, the best advice is to work with an adviser who specializes in retirement income planning,” she says.
An adviser can help you assess your immediate and long-term income needs, as well as your portfolio size and composition, to figure out if it makes sense to take benefits now versus wait to receive your maximum monthly Social Security payout.
Keep in mind, though, that depending on the nature of your health issues, it may be feasible to continue working in some capacity instead of full-time. That could make the case for delaying Social Security and living on a combination of savings and whatever wages you’re able to bring in. So it’s worth looking at the situation from every angle and consulting a professional to help you weigh your options.