When Can I Start Collecting Social Security?
The answer should be easy to answer. You retired and you should start collecting benefits. BUT it is not.
The minimum age to claim benefits is 62. If you are turning 62 and need the income from Social Security to support yourself, then you can start claiming your benefits now. However, if you have enough other income to keep you going until you are older, you may want to delay increasing the size of your monthly benefit.
What Is Full Retirement Age (FRA)?
The size of your monthly Social Security benefit depends on a few factors, including how much you earned over the years, the year you were born, and the age when you start claiming.
You’ll receive your full monthly benefit if you start claiming when you reach what Social Security considers your full retirement age (FRA), sometimes also referred to as “normal retirement age. To find your FRA, see the chart below.
Finding Your Full Retirement Age (FRA) |
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How to Calculate Social Security Benefits
Let’s say your FRA is 66. If you start claiming benefits at age 66 and your full monthly benefit is $2,000, then you’ll get $2,000 per month. If you start claiming benefits at age 62, which is 48 months early, then your benefit will be reduced to 75% of your full monthly benefit—also called your “primary insurance amount.” In other words, you’ll get 25% less per month, and your check will be $1,500.
That reduced benefit won’t increase once you reach age 66. Rather, you’ll continue to receive it for the rest of your life. It may go up over time due to cost-of-living adjustments (COLAs), but only slightly.
What Happens if You Claim After Your FRA?
If you wait until your age 70 to start claiming benefits, then you’ll get an extra 8% per year—or, in total, 132% of your primary insurance amount ($2,640 per month in the example above) for the rest of your life. Claiming after you turn 70 doesn’t increase your benefits further, so there’s no reason to wait longer than that.
The longer you can afford to wait after age 62 (up to 70), the larger your monthly benefit will be. Nevertheless, delaying benefits doesn’t necessarily mean you’ll come out ahead overall. Other factors should be considered, including your expected longevity and whether you (or your spouse) plan to file for spousal benefits. You should also consider the tax, investment opportunity, and health coverage implications.
The Bottom Line
You don’t have to take Social Security just because you’re retired. If you can live without the income until age 70, then you will ensure the maximum payment for yourself and lock in the maximum spousal benefit. Just be sure you have enough other income to keep you going and your health is good enough that you are likely to benefit from the wait. When you’re ready to make your Social Security decisions give us a call to help you determine what is best for you.