If you need your Social Security check to be as large as possible, you should avoid taking these misguided actions.
Social Security benefits are an important income source for many seniors. If you expect these benefits to play a big role in funding your retirement, you need to understand that certain actions could shrink your monthly payments.
Specifically, if you make these three moves, you'll end up with less money flowing into your bank account each month as a retiree.
1. Claiming benefits before age 70
The first move guaranteed to shrink your monthly Social Security check is claiming benefits before age 70. While you can start getting benefit checks as young as 62, this will make your payment much smaller.
See, you have a full retirement age, or FRA (which is 66 and 10 months for those born in 1959 and 67 for anyone born in 1960 or later). If you claim benefits at your full retirement age, you get your standard benefit based on earnings over your working life. However, for every month you claim benefits before your FRA, there's an early filing penalty. The penalty is pretty small each month — 5/9 of 1% for the first 36 months and 5/12 of 1% for prior months — but it adds up quickly. Those who claim at 62 instead of 67, for example, will see a monthly payment that's 30% smaller, while claiming benefits even a year early leads to a 6.7% reduction.
Delaying a benefits claim has the opposite effect. Every month you delay the start of your benefits, you earn a delayed retirement credit that increases your monthly payments by 2/3 of 1%. Credits can't be earned after 70, though, so waiting until then gets you the maximum monthly payment, netting you 24% more than your standard benefit.
If you don't want to miss out on the chance to maximize your monthly checks, avoid claiming before 70. Of course, this doesn't always mean you'll get the most lifetime benefits, as you have to live long enough to make up for the years of missed checks to do that. Still, most retirees end up better off by waiting, and you can earn higher survivor benefits for your spouse if you're the higher earner and you delay.