Image source: Getty Images.
Social Security is rather vital to most Americans. According to the Social Security Administration, the majority of elderly beneficiaries get 50% or more of their income from Social Security, while 21% of married elderly beneficiaries and 43% of unmarried ones get fully 90% or more of their income from it. Thus, it's worth learning more about the program and how to collect as much as you can from it. Here's a start: three Social Security figures we should all know.
You can start collecting while you're still relatively young. Image source: Getty Images.
The earliest age at which you can start collecting benefits
Selena Maranjian: One Social Security number all Americans should know is 62. That's the earliest age at which you can begin collecting retirement benefits. You may not have thought of it much -- maybe because you mistakenly assumed that you have to be 65 or older before you can start collecting. That's not the case, though. Those who are 62 and barely out of their 50s are eligible to start receiving monthly checks.
You may also have simply ignored the early Social Security starting age of 62 because you know that you can collect bigger checks by waiting. Based on your birth date, you have a "normal" or "full" retirement age -- the time at which you can begin collecting your "full" benefits. It's 66 or 67 for most people, at this point.
For each year that you delay starting to collect your benefits from your full retirement age to the age of 70, your benefits will grow by about 8%. Delay from age 67 to 70 and your checks can be 24% bigger! That can sure seem like a no-brainer reason to delay, but hold on.
Though your starting-at-70 checks will be bigger than your starting-at-67 ones, you'll receive 36 fewer of them. Similarly, if you start collecting at 62, your checks will be for less than your full benefit, but you'll receive many more of the smaller checks. It's all designed to be mostly a wash, no matter when you start collecting -- if you live an average life span.
Thus, each of us should decide when to start collecting based on our own situation. There's no one-size-fits-all recommendation. If you're likely to live a life of relatively normal length, then consider starting to collect at 62. You may be able to enjoy a longer and better retirement that way. If your family has many nonagenarians in it, and you can afford to delay collecting until age 70, then delaying can make sense.
Image source: Getty Images.
How much you can expect to get
Matt Frankel: One important Social Security number you should know -- especially as you get closer to retirement -- is your Primary Insurance Amount, or PIA. This is the Social Security benefit to which you would be entitled if you retired at exactly your full retirement age, which depends on the year in which you were born.
|
If You Were Born In: |
Your Full Retirement Age Is: |
|---|---|
|
1954 or earlier |
66 years |
|
1955 |
66 years, 2 months |
|
1956 |
66 years, 4 months |
|
1957 |
66 years, 6 months |
|
1958 |
66 years, 8 months |
|
1959 |
66 years, 10 months |
|
1960 or later |
67 years |
This is based on an inflation-weighted average of your highest 35 years of earnings, up to the annual taxable maximum Social Security wages. If you worked for fewer than 35 years, zeros will be averaged into the calculation for the missing years. Once your lifetime monthly average has been determined, the following formula is applied to determine your PIA:
- 90% of the first $856
- 32% of the amount over $856, up to $5,157
- 15% of the amount over $5,157
You can calculate your PIA using this worksheet provided by the Social Security Administration -- or better yet, you can get a good estimate of what yours will be by creating an account at www.ssa.gov, and viewing your latest Social Security statement.
Image source: Getty Images.
How much you'll receive depending on when you start
Jason Hall: One of the most important things to know about Social Security is how much you'll get, depending on when you apply for your benefit. As Selena points out, there are pros and cons to taking Social Security at different ages, based on many factors. What makes sense for one person may not make sense for another.
For this reason, understanding exactly how much your benefit would be, based on what age you actually start taking it, is critically important. Here's a table that breaks down your benefit percentage, depending on your full retirement age:
| Year of Birth | Full Ret. Age | Percentage of Full Benefit Paid Beginning at Age: | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 62 | 63 | 64 | 65 | 66 | 67 | 68 | 69 | 70 | ||
| 1943-54 | 66 | 75 | 80 | 86 2⁄3 | 93 1⁄3 | 100 | 108 | 116 | 124 | 132 |
| 1955 | 66, 2 mo. | 74 1⁄6 | 79 1⁄6 | 85 5⁄9 | 92 2⁄9 | 98 8⁄9 | 106 2⁄3 | 115 2/9 | 124 4/9 | 130 2⁄3 |
| 1956 | 66, 4 mo. | 73 1⁄3 | 78 1⁄3 | 84 4⁄9 | 91 1⁄9 | 97 7⁄9 | 105 1/3 | 113 3/4 | 122 6/7 | 129 1⁄3 |
| 1957 | 66, 6 mo. | 72 1⁄2 | 77 1⁄2 | 83 1⁄3 | 90 | 96 2⁄3 | 104 | 112 1/3 | 121 1/3 | 128 |
| 1958 | 66, 8 mo. | 71 2⁄3 | 76 2⁄3 | 82 2⁄9 | 88 8⁄9 | 95 5⁄9 | 102 2/3 | 110 8/9 | 119 3/4 | 126 2⁄3 |
| 1959 | 66, 10 mo. | 70 5⁄6 | 75 5⁄6 | 81 1⁄9 | 87 7⁄9 | 94 4⁄9 | 101 1/3 | 109 3/7 | 118 1/5 | 125 1⁄3 |
| 1960 and later | 67 | 70 | 75 | 80 | 86 2⁄3 | 93 1⁄3 | 100 | 108 | 116 2/3 | 124 |
Data source: Social Security Administration.
Whether you are only a few years from retiring, or still measuring in decades, understanding how much you can expect from Social Security can go a long way toward making sure you're saving enough for retirement on your own. The more you know about Social Security, the more you'll be able to employ benefit-maximizing strategies -- and the more comfortable your retirement will likely be. As an example, if your full retirement age is 66 and you start collecting benefits at age 62, your checks will be 75% of what they would have been had you waited until age 66. If you start at age 68, they will be 116% of your full benefit.
