Do you know how old you have to be in order to claim your standard Social Security benefit? Chances are good that you don't -- and you may be anticipating that you can get it at a much younger age than you actually can.
In fact, a recent Nationwide survey revealed that every age group anticipated being able to claim their full retirement benefit well before it would actually be available. And one demographic group was the most off-base when it comes to estimating when benefits can begin.
Here's when Americans think they can claim their full Social Security benefits
According to Nationwide, the average age when Americans of all ages believe they can claim their standard Social Security benefits is 61 years old. But some groups anticipate being able to get a full benefit at a much younger age than others. Here's when each different demographic group believes full Social Security eligibility occurs:
- Baby boomers believe retirees become eligible for their full benefit at 64.
- Gen X anticipates retirees getting it at 59.
- Millennials think they can get their full Social Security benefit at 52.
While baby boomers are the closest to being accurate, the reality is that every one of these guesses is not correct. And, in fact, both Gen X and millennials are so off-base with their estimate that they've actually anticipated seniors can get their full benefit at a time before any Social Security retirement income is actually accessible.
Millennials have the most inaccurate guess, as they've underestimated how old they'll need to be by more than a decade.
Here's the reality about when Social Security benefits become available
So if everyone is wrong about the age when they can get their first Social Security check, what is correct?
It depends on when you were born. While full retirement age (FRA) used to be 65 for every senior, retirees now need to wait until between 66 and four months and age 67 in order to get a standard benefit unreduced by early filing penalties.
Retirees can, of course, claim benefits before their full retirement age. But they can't start them as young as Gen X and millennials anticipate. Retirement benefits don't become available until age 62 at the earliest. And, at that age, a monthly check would be significantly smaller than the payment seniors would get at their full retirement age. In fact, if your FRA is 67, claiming benefits at 62 would result in a 30% reduction in monthly income.
There are serious consequences to underestimating your FRA
Unfortunately, underestimating when a standard Social Security benefit becomes available can be a costly mistake.
The standard benefit retirees receive is based on a percentage of average wages earned over their career, but the percentage isn't huge as retirement benefits are meant to replace only around 40% of preretirement income.
Even the standard benefit is far from enough to live on. And anticipating that it will be available so early on could lead to a big reduction that leaves you struggling financially. Anticipating Social Security can be claimed at a young age could also cause you problems if you're hoping to retire at that time and it turns out you are years away from getting any benefits at all.
You don't want to guess your full retirement age wrong and end up relying on Social Security income that doesn't come, or find yourself failing to make the most strategic choice about the best age to start your checks.
So make sure you learn when your full retirement age is as well as how your age when you start your checks affects the income you get each month. Only by understanding these facts can you make the right choices about a crucial source of retirement funds.