Social Security provides critical benefits for millions of retirees, but what many workers don't realize is that the age you claim Social Security can impact the amount you receive each month in benefits. Though you're allowed to start collecting benefits as early as age 62, if you want to receive your full benefit, you'll need to wait until your full retirement age to make that claim.

Retired Couple Painting

IMAGE SOURCE: GETTY IMAGES.

Your full retirement age is determined by the Social Security Administration based on when you were born. If your year of birth is 1943-1954, your full retirement age is 66. If you were born in 1960 or later, your full retirement age is 67. And if you were born between 1955 and 1959, your full retirement age falls somewhere in between. As long as you wait until your full retirement age to first take Social Security, you'll get the full benefit payments you're entitled to collect.

You have more control over your benefits than you might think

Your Social Security benefit payments are based on your top 35 years of earnings. Once those earnings are averaged to establish a base payment amount, you have the power to raise or lower that benefit depending on the age at which you first claim Social Security.

The earliest age you're allowed to collect Social Security is 62, but claiming early comes at a cost. If you take benefits before reaching your full retirement age, you'll lose 6.67% of your full benefit amount for up to three years and then 5% a year thereafter. So if your full retirement age is 66 and you claim benefits at 62, you'll reduce your payments by 25%.

On the other hand, if you delay Social Security past your full retirement age, you'll raise your benefits by 8% each year up until age 70, at which point the incentive to hold off runs out. So if your full retirement age is 66 and you wait until 70 to take Social Security, you'll increase your payments by 32%.

Keep in mind that whatever benefit amount you first lock in will be the payment amount you receive for life. If you're eligible for a full benefit of $1,500 a month at age 66 but claim Social Security at 62 to get your hands on that money sooner, you'll reduce your benefit to $1,125, and that's all you'll collect each month from that point on. Your benefit won't go back up once you reach your full retirement age.

Know your full retirement age

Because waiting until your full retirement age can help you maximize your Social Security payments, it's important to be aware of when you should be claiming benefits. Though the full retirement age for Social Security used to be 65, it has since increased due to changes in life expectancies. The following table shows what your full retirement age will be based on the year you were born:

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

67

DATA SOURCE: SOCIAL SECURITY ADMINISTRATION.

Since Social Security first began paying benefits in 1940, the average life expectancy for men reaching age 65 has increased almost seven years to 84.3. For women, it's increased almost seven years to 86.6. If you were born in 1960 or later, you should know that your full retirement age might change down the line if life expectancies continue to increase across the board. Similarly, the rules around claiming benefits early or late might also evolve over time, so it pays to keep tabs on Social Security changes that could eventually impact your payments.

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