If you were born in or after 1960, your Social Security full retirement age is 67. That's the age at which you qualify to receive 100% of your Social Security benefit, but you don't have to take it then. You can claim benefits anywhere between age 62 and 70, and there are good arguments for claiming early or late.
Here's what you should know about your options.
Social Security's choices
The typical worker qualifies for Social Security benefits after working 10 years. Once you've accumulated enough credits (40 are needed), you can claim your benefits anytime after reaching age 62.
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However, in order to receive 100% of your benefit amount, you must wait until your full retirement age to claim your benefits. Your full retirement age depends on when you were born; it's age 66 and two months for people turning 62 this year. The full retirement age will increase by two months annually until it reaches age 67 for people born in or after 1960.
If your full retirement age is 67, you can begin receiving benefits as early as age 62; however, your benefit will be reduced by a fixed percentage for every month you claim early. For example, claiming at age 62 will net you 70% of your full retirement age benefit, and claiming at age 65 will get you 86.7% of your benefit.
Alternatively, you can delay claiming your benefits and receive a bigger payment than you'd get at age 67. Social Security rewards those who wait with delayed retirement credits that increase your payment by a fixed percentage for every month you delay, up to age 70. For example, if your full retirement age is 67, and you wait until age 70 to claim, you'll receive 124% of your full retirement age benefit.
Because Social Security doesn't provide additional credits after age 70, there isn't any benefit to holding off beyond that point to claim.
Is 67 the best age to claim?
When deciding when to claim your benefits, you should consider your retirement goals, your health, your other sources of retirement income, and your plans to provide for your spouse after your death.
If your retirement goals include world travel, then retiring when you're younger and healthier might be your best choice. If you're in poor health, or you don't have longevity in your family tree, you might also want to claim early. Alternatively, if you have a pension or significant retirement savings, waiting to claim so that you benefit from delayed retirement credits could be the best decision, especially if you're in excellent health.
It's also important to remember that when you claim your benefits will determine how much money your spouse can collect in Social Security after you're gone. If you claim early, the maximum amount they'll receive in spousal benefits after you're gone will be the same as what you would be receiving if you were still alive.
To summarize, if you claim early, you'll get more checks during your lifetime, but they'll be smaller. If you claim late, you'll get fewer checks during your lifetime, but they'll be bigger.
From a financial perspective, making a decision on when to claim can be helped by considering the breakeven points associated with claiming at different ages. For instance, the following chart shows the breakeven points for someone with a full retirement age of 67 who claims at either 62, 67, or 70, and has a full retirement age benefit of $1,000 per month. As you can see, if you claim at 67, you'll collect more in total lifetime benefits by the time you're 78 than you would if you claim at age 62. Claiming at age 70 results in a larger lifetime payout by age 82 compared to claiming at age 67.
Chart and calculations by author.
While breakeven analysis provides additional insight that can help you decide when it's best to claim benefits, it shouldn't be your only consideration. Regardless of what age you plan on claiming, make sure to factor in the risk of being forced to claim benefits at an earlier age than you want. In many cases, people receiving Social Security benefits have been forced to claim them early because of a job loss or an unexpected illness. For this reason, having a backup plan that includes saving enough to adequately supplement your Social Security income is a must.
