FYI: Looking to get your retirement financials in order? Then check out our review of Retirable, an affordable software that streamlines the process of financial planning.
When Should You Start Taking Social Security?
According to the Social Security Administration, nearly 90% of people over 65 are currently receiving Social Security benefits. Among retired workers and benefits, the average monthly benefit is $1,825. Yet, while an individual’s benefit amount is based on their lifetime earnings, it can also vary based on the age at which one chooses to begin receiving benefits.
While you can begin collecting Social Security as early as age 62, your benefit amount could increase if you wait. For those who can hold off on taking Social Security benefits, waiting until age 70 will give you the maximum possible amount.
FYI: Looking to get your retirement financials in order? Then check out our review of Retirable, an affordable software that streamlines the process of financial planning.
The full retirement age is between the ages of 66 and 67, depending on when you were born. The reason for the scaling is that as the average life expectancy increases, people are living off Social Security for longer than the system ever could have anticipated. The retirement age has been gradually increased over time to keep the system balanced.
“Full retirement age” refers to the age at which you can receive the full payout of your Social Security fund. Note that while the full retirement age continues to increase, the Medicare Part B and Part D coverage age remains 65. You should still apply for those benefits before your 65th birthday, even though your full retirement age comes later.
| Year of Birth | 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 |
Source: SSA.gov
In 2023, if a 62-year-old were to start taking benefits, their maximum benefit (which varies by lifetime income) would be $2,572 per month. However, if this same person waited until age 70, their maximum benefit would be $4,555.
As you can see, a person can nearly double their Social Security income by waiting until age 70; however, this means they won’t be getting Social Security checks in the interim for eight years. When deciding when to begin taking Social Security, a person should consider both their life expectancy as well as additional sources of income.
As a general rule, the earlier you take Social Security payments, the less of your benefit you’ll receive. The longer you wait, up until age 70 (at which point you’ve reached your maximum benefit amount), the more you’ll receive. Since your benefit is based on your lifetime income, it will vary from person to person; however, the same formula applies.
If you retire one to 36 months before the full retirement age, your benefits are reduced by 5/9 of 1 percent per month. After 36 months, the benefits are reduced by 5/12 of 1 percent.
To put this in perspective, let’s take the example of a person born after 1960, making $100,000 per year before they retire. If they retire at age 62, they will have an estimated monthly benefit of $1,715. If they retire at age 64, that benefit increases to $2,035 per month. At age 67, their benefit will be $2,662. And if they wait to retire until age 70, their monthly benefit will be $3,353.
These numbers are generated from this benefits calculator on the Social Security government website. As you can see, waiting even a year can drastically improve your monthly benefit. Try inputting your information to see how your retirement plans will affect your benefits.
Despite the fact that retiring later can increase your monthly benefits, not every person should wait. Depending on your situation, you may want to retire early to get access to the money sooner, even if the monthly amount is lower.
Though Social Security was not designed to be a person’s sole source of income after retirement, 40.2 percent of seniors have no other income, according to the National Institute on Retirement Society.
For seniors who need to collect Social Security benefits to make ends meet each month, they may need to start taking them out as soon as they can. Extenuating circumstances, such as health bills or family needs, could also make it necessary to collect benefits early.
Life expectancy, which hovers around 76 years in the United States, according to the CDC, could be another influencing factor on your desire to withdraw Social Security benefits early.
Though it’s impossible to predict a person’s life expectancy, a terminal illness or other life-threatening condition could suggest that waiting to withdraw benefits until the age of 70 would shortchange someone out of their years of contributions while they were working. They may benefit from withdrawing the money early and enjoying retirement while they can.
Your marital status may also affect the value of your Social Security benefits. At retirement age, you have a choice between 100 percent of your benefits or 50 percent of your spouse’s benefits. If they are the higher earner, it may be beneficial to claim their record instead.
Additionally, if you were married for over 10 years, you can also collect 50 percent of your ex-spouse’s retirement benefits. For those who are widowed, you have a choice between your benefits and your spouse’s benefits.
Note that the survivor’s benefit, plus your spouse’s Social Security income, may be worth more per month than your own benefits. Carefully consider your options before choosing a payout method.
If you continue working past retirement age, even while receiving Social Security benefits, those benefits could increase. However, you would still be paying Social Security taxes at the same time.
Once you apply for retirement benefits, your taxes and monthly checks will change accordingly. Notably, workers aged 70 and older will not receive increased benefits, so there’s no longer an advantage to delaying your claim.
While the common wisdom is to wait to collect Social Security until you’ve reached full retirement age, you may be able to increase your benefits by waiting longer. Since every benefits package is calculated differently, you may benefit from considering your spouse’s retirement plan when choosing your retirement age.
On the other hand, you may benefit from retiring early due to extenuating circumstances. There is no one-size-fits-all advice for when to take Social Security benefits, so you should always speak with a financial advisor to learn the best way to manage your retirement plan.
To learn more about retirement strategies, read our helpful guides:
