You've probably spent most of your working years saving for retirement and setting aside part of each paycheck to support your future. Like many Americans, you may still wonder if you have saved enough to live comfortably once you stop working.
Social Security can help add to your retirement income. One of the biggest questions is when to start collecting benefits. If you are unsure, learning how Social Security works and understanding key benefit ages can help you make a confident choice.
Understanding Social Security
Before reviewing benefit ages, it helps to understand how Social Security works. Full retirement age is when you qualify to receive 100% of your benefit. This age depends on your birth year.1 If you were born in 1937 or earlier, your full retirement age is 65. If you were born between 1943 and 1954, it is 66. For those born in 1960 or later, full retirement age is 67.
Longer life expectancy has played a role in these changes. Raising the full retirement age encourages people to work longer and pay more into the system. If you claim benefits before your full retirement age, your monthly amount will be reduced based on how many months early you begin.
Your monthly benefit is also based on your lifetime earnings. The Social Security Administration calculates your benefit using your highest 35 years of earnings and your average monthly income during that time.2 You can use the SSA retirement estimator to get an estimate of your future monthly benefit.3 Some wages are not covered, including certain state and local government jobs and railroad employment.
Collecting at Age 62
You can begin collecting Social Security as early as age 62. However, starting before your full retirement age reduces your benefit permanently. The reduction is based on the number of months you receive benefits early.
In general, the longer you wait, the higher your monthly benefit will be, up to a certain age. Depending on your needs, it may help to compare your income sources, expenses, and retirement goals before filing early.
Collecting at Full Retirement Age
If you begin collecting at your full retirement age, you will receive your full benefit amount. In the past, full retirement age was 66 for many workers. Today, it ranges from 66 to 67, depending on your birth year.
Waiting until 67 instead of 66 may not seem like a large difference. However, if you planned to retire at 65 or earlier, you may need to rely on savings or other income sources until your Social Security benefits begin.
Collecting at Age 70
You also have the option to delay benefits beyond your full retirement age. For each year you delay, your benefit increases until age 70. After age 70, your benefit no longer grows.
For example, if your full retirement age is 66 and you delay until 70, you could receive up to 132 percent of your original benefit. If your monthly benefit at full retirement age would have been $1,000, delaying until 70 could increase it to $1,320 per month.
The advantage of waiting is a larger monthly payment. The tradeoff is that you will need other income sources during the years you delay benefits.
More than 70 million Americans receive Social Security.4 Deciding when to claim benefits depends on several factors:
- How much have you saved for retirement?
- What are your current expenses?
- How long do you plan to keep working?
Health coverage also matters. Medicare generally begins at age 65. If you plan to delay Social Security, contact the Social Security Administration about three months before turning 65 to enroll in Medicare.
The Bottom Line
You have worked hard throughout your career, and Social Security is part of the benefit you earned. The age you choose to claim can affect your monthly income for the rest of your life. Take time to review your savings, expenses, and long-term goals so you can choose a start date that supports steady income throughout retirement.
Sources
- Starting Your Retirement Benefits Early. https://www.ssa.gov/benefits/retirement/planner/agereduction.html.
- Your Retirement Benefit: How It’s Figured. https://www.ssa.gov/pubs/EN-05-10070.pdf.
- Retirement benefits. https://www.ssa.gov/retirement.
- Social Security performance. https://www.ssa.gov/ssa-performance.
