The age at which you file for Social Security is important. Though your benefits are calculated based on your 35 highest-paid years of wages, the age when you claim them can cause that number to change, both for better and for worse.
The Social Security Administration will allow you to file for benefits as early as age 62 or as late as age 70. Technically, you can file as late as you want (or never file at all, for that matter), but from a financial perspective, there's nothing to be gained by delaying benefits past your 70th birthday.
Somewhere in the middle of that window is your full retirement age -- the age at which you're entitled to your full monthly benefits based on your earnings record. Claiming Social Security before full retirement age will reduce your benefits, while delaying benefits past full retirement age will cause those payments to increase.
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Knowing your full retirement age can help you make an informed decision as to when to file, but it's also not a universal number. Rather, your full retirement age depends on the year you were born, and it's essential that you commit that number to memory.
What's your full retirement age?
Waiting until full retirement age to file for Social Security can help ensure that your monthly benefits aren't slashed. Here's what that age is for you, depending on when 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.
As stated earlier, you don't have to claim Social Security at full retirement age. You can file earlier, but in doing so, you'll lose 6.67% of your benefits per year for the first three years you file early, and 5% of your benefits for each year after that.
Here's what that means: If your full retirement age is 67 but you claim benefits at the earliest possible age of 62, you'll lose 20% for filing three years early, and another 10% for filing an extra two years early. All told, that's a 30% reduction.
Furthermore, when you slash your benefits by filing early, their full amount is not reinstated once you reach full retirement age. Rather, the monthly sum you start collecting initially is the same amount you'll collect for life, unless you manage to withdraw your benefits application within a year of filing, and also pay back every cent you received in benefits within that time frame.
On the other hand, if you delay benefits past full retirement age, you'll boost them by 8% a year up until you turn 70, and that increase will remain in effect for the rest of your life. This means that if your full retirement age is 67, filing at 70 will give you 124% of whatever benefit your earnings history entitles you to.
Remember, full retirement age isn't the same for everyone, so it's important to know when you're entitled to claim your Social Security benefits in full. In a 2017 Fidelity survey, 74% of Americans couldn't correctly identify their full retirement age, so write that number down somewhere to ensure that you don't forget it.
