As you approach retirement, it’s natural to wonder at what age it would be best for you to begin receiving Social Security benefits. Ultimately, this is a very personal choice that is different for everybody. It is best to make an informed decision based on your individual and family circumstances.
In this guide, we’ll point out some information and considerations that are worth taking into account when deciding when to begin claiming Social Security benefits.
Full retirement age, also called the normal retirement age, is the age at which you are eligible to receive full Social Security benefits. Your exact full retirement age will depend on your birth year.
Review the chart below to find the full retirement age that applies to you.
|Birth year||Full retirement age|
|1943 - 1954||66|
|1955||66 and 2 months|
|1956||66 and 4 months|
|1957||66 and 6 months|
|1958||66 and 8 months|
|1959||66 and 10 months|
|1960 and later||67|
You can begin receiving Social Security benefits as early as 62 years old. However, if you take them before your full retirement age, they will be permanently reduced by a small fraction (five-ninths of one) of a percent for each month before your full retirement age. If you begin more than 36 months before your full retirement age, the worker benefit will be further reduced by five-twelfths of one percent per month for the rest of retirement.
The table below clarifies how much your benefit will be reduced if you take your retirement benefits at age 62 depending on your birth year.
|Birth year||Months between age 62 and full retirement age||The retirement benefit is reduced by|
|1943 - 1954||48||25%|
|1960 and later||60||30%|
Let’s review how the total retirement benefit reduction percentage is calculated. If you begin taking benefits at 62 years old and you were born after 1960, you will be receiving them for 60 additional months.
The reduction for the first 36 months will be five-ninths of 1% times 36 = 20%.
The additional 24 months will be reduced by five-twelfths of 1% times 24 = 10%.
Added together, this reduces your overall monthly benefits by 30%.
If you delay taking your Social Security benefits until after your full retirement age, you’ll earn a delaying retirement credit. This will increase your retirement benefits by 8% per year up until age 70.
For example, if your full retirement age is 67 and you delay until 70, you will receive 8% times three = 24% higher benefits.
Note that the adjustment made to your benefits on the basis of when you begin taking them is usually permanent. The benefits you receive for the rest of your life will be set based on this adjustment.
In this way, delaying benefits can lead to a significant increase in monthly benefits, especially compared to taking benefits early. For example, if you are born after 1960 and delay taking benefits until age 70, you will receive 77% more per month than you would if you take benefits early at age 62.
As you can see, delaying taking Social Security benefits as long as possible will help you receive more money every month. However, this is not always possible for everybody. There are several personal and familial considerations that will play into when you should or need to begin taking benefits. Some of these include:
As this article makes clear, the choice of when to begin taking Social Security benefits is nuanced and dependent on several very personal factors. While for some people, like those who do not have the means to support themselves, cannot work, and/or do not expect to meet the life expectancy, the choice to take benefits early may be clear, for others, it isn’t as obvious what to do. Speaking to a financial planner may be the best way to make an informed, smart decision.