What's the Early Retirement Age for Social Security?

There are few things most people look forward to more than retirement. It's for this reason that readers are often interested in knowing what the early retirement age is for purposes of Social Security.

The earliest possible age at which you can begin to collect Social Security retirement benefits is 62 -- or, more specifically, the first full month following your 62nd birthday.

Should you take Social Security early?

The fact that you're eligible to begin collecting benefits at 62 doesn't necessarily mean that you should. I say this because the size of your monthly checks is directly related to the age at which you elect to receive them.

The standard threshold for our purposes is your primary insurance amount. This is how much you'd receive each month if you waited until full retirement age -- which, at present, is 66 years old -- to start collecting benefits.

If you apply for Social Security earlier than that, then your benefits are permanently reduced by a set percentage each month prior to full retirement.

For example, if you take them at 62, then they will forevermore be 25% smaller than your primary insurance amount. By contrast, if you defer benefits beyond full retirement, then they grow in size by 8% each year until you turn 70, at which point they're maxed out.

The net result is that, if you're focused exclusively on maximizing the size of your monthly checks, then it would behoove you to hold out for as long as possible (but no later than age 70) before applying for benefits.

Is bigger necessarily better?

That being said -- and this is an important point -- the fact that delaying benefits will make them bigger doesn't necessarily mean you'll end up receiving a bigger total amount by waiting.

This is because the Social Security Administration has designed the benefit formula to yield the same amount in aggregate lifetime benefits regardless of the age at which the average American takes them.

If you take benefits at the early retirement age of 62, then the checks will be smaller, but you'll get more of them. Meanwhile, if you wait until 70, you'll get far fewer checks, but they'll be substantially larger.

The breakeven point -- that is, the age at which you will have received the same total amount whether you claimed benefits at 62 or 67 -- is age 77. Before that age, the typical Social Security beneficiary receives more in lifetime benefits by electing to take them early. But after that age, the retiree who delays benefits pulls further and further ahead thanks to those larger monthly checks.

The bottom line on the early retirement age

At the end of the day, the decision regarding when to take Social Security benefits boils down to need and quality of life. If you need them, take them. If you don't need them, and you expect to live out a long retirement, there's little reason not to let them grow. That said, you may decide that even though you don't need to take benefits early, you'd like to enjoy that extra income sooner rather than later. There's no one-size-fits-all solution -- it all comes down to what you feel is best for you.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 15, 2014, at 7:37 AM, HarryGr wrote:

    Everyone should work at developing multiple streams of income for retirement and not depend soley on Social Secuirty if at all possible. The decision to take early retirement may be dependent on the income avaialbe for retirement. Early retirement may also be forced on some if they lose their jobs or have to retire for health reasons.I just read several good posts on retirement planning, investing, social security, early retirement and more on the site Retirement And Good Living. the site offers very useful information on many retirement topics and has a great blog of posts by guests from around the globe.

  • Report this Comment On August 15, 2014, at 8:43 AM, SailorKane wrote:

    The "breakeven" point may be different from that shown here, especially for married couples. The spousal benefit complicates it. In my case, the breakeven point is 85, for retirement 12 months early, with some "giveback" due to excess part time work (for an effective 9 month early retirement). (Receipt of $29000 before FRA, drop in monthly benefits of $120, 240 months or 20 years payback) The "Net Present Value" actually favors retirement at or even a year before full retirement age for me. I bought a social security maximizing calculator which determined that age 67 was my "optimum" time to retire (including spousal benefits), but I inputted my own scenario of retirement at 65, 12 months early, and it beat the calculator's best. So, depending on your exact situation, taking SS early might be the mathematically best option.

    Multiple sources of income are very nice. I have SS, spouse SS, two IRAs anchored in long high-grade bonds, investment account, part time job I enjoy and can scale up or down at will, and unemployment from that job, and a small pension from a former employer.

    Quality of life issues and personal situation also may favor early retirement. Another fool article stresses that point.

  • Report this Comment On August 15, 2014, at 9:10 AM, cholmes55 wrote:

    I think that discussions about Social Security especially for married couples are very complex and personal.

    One benefit to delaying Social Security for married folks is Long term care. If the first to die has a major LTC event, all of an average persons investments can be wiped out except their home. Assuming no LTC insurance maximizing Social Security can leave the survivor in a livable situation even after a catastrophic LTC event.

    I think in many cases for early retirement it is wiser to live off of ones own assets, and delay SS.

  • Report this Comment On August 18, 2014, at 6:05 AM, nahag wrote:

    When I became disabled from a work injury, I had to move outside of the US and scale back my living standard. I hear that US retires living in the US are hardly making ends meet. Is this true?

  • Report this Comment On August 18, 2014, at 6:44 AM, Mathman6577 wrote:

    Why do most financial advisors push people to delay taking SS?

    The "break-even" point does not take into account any investment gains that the money taken "earlier" might earn.

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John is The Motley Fool's senior banking specialist. If you're interested in banking and/or finance, you should follow him on Twitter.

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